In this episode of the Accounting Edit podcast, Leah McCool and Aminder Mann delve into the intricacies of accounts payable and accounts receivable, using the example of Michelle, a photographer. They discuss the importance of tracking business expenses, processing invoices, and managing cash flow effectively. The conversation highlights practical steps for handling accounts payable, including invoice review, payment scheduling, and the significance of understanding payment terms. They also explore accounts receivable, emphasizing the need for timely invoicing and follow-ups to ensure cash flow into the business. The episode concludes with insights on managing bad debts and the interconnectedness of accounts payable and receivable in financial management.
What You’ll Take Away:
• Accounts payable involves tracking money owed to vendors and contractors.
• It's crucial to review invoices for accuracy before making payments.
• Understanding payment terms can optimize cash flow management.
• Timely invoicing is essential for maintaining cash flow.
• Using accounting software can streamline the accounts payable process.
• Collecting W9 forms upfront simplifies 1099 filing later.
• Accounts receivable is about tracking money owed to the business.
• Following up on overdue invoices is key to cash flow management.
• Bad debts should be written off to maintain accurate financial records.
• Accounts payable and receivable are interconnected in managing business finances.
Website: TheAccountingEdit.com
Aminder's Links:
Website: sequoia-cpa.com
Instagram: @sequoiacpa
LinkedIn: linkedin.com/company/sequoia-cpa
Leah's Links:
Website: orca-accounting.com
Instagram: @orcaaccounting
LinkedIn: linkedin.com/in/leahmccool
Chapters
00:00 Understanding Accounts Payable
09:13 Navigating Accounts Receivable
Key Words: Accounts Payable, Accounts Receivable,Cash Flow, Invoicing, Business Expenses, Financial Management, Small Business Accounting, Vendor Payments, Client Payments, Accounting Software, Bookkeeping