Accounts payables/ supplier management

▬ What it is ▬

What is Accounts Payables/Supplier Management?

Accounts payables (often called supplier management) involve keeping track of the money a business owes to its suppliers. Here's how it works in simple terms:

Key Concepts of Accounts Payables/Supplier Management

Purchases on Credit
When a business buys products or services and agrees to pay the supplier later, the unpaid amount is called accounts payable.
Receive Invoices
Suppliers send invoices to the business, which are bills showing how much is owed and the payment due date.
Record Keeping
The business records all these invoices, keeping track of what needs to be paid and when.

▬ Importance ▬

Why is Accounts Payables/Supplier Management Important for Small Businesses?

Accounts payables and supplier management are essential for small businesses to maintain good cash flow, build trust with suppliers, and ensure smooth operations. By effectively managing what they owe, businesses can avoid financial pitfalls and foster healthy business relationships.

Here are some Key factors:

Cash Flow Management

Managing accounts payables helps control cash flow. Knowing when payments are due ensures the business has enough cash on hand to meet its obligations.

Creditworthiness

Paying suppliers on time helps build the business’s creditworthiness, which is important for securing loans or better payment terms in the future.

Supplier Relationships

Good relationships with suppliers can lead to better deals, discounts, and priority service. Suppliers are more likely to be flexible and supportive if they trust the business will pay on time.