Tag: accounts payable minnesota

You’re losing money. Is it a poor management of accounts payable?

Bookkeeping Company Minneapolis

We all know that accounts payable is more than just paying the bills.  A poorly managed accounts payable can harm your profit margins, while a well-managed accounts payable can boost your bottom line.

It is not uncommon for companies to attach more importance to profits than to expenses. Expenses, like revenue, impact profitability as well. Thus, accounts payable management also has a direct effect on the bottom line of your company.

You can learn what you need to do to make sure your payables have a positive impact on profitability by reading on.

Top 3 Ways Accounts Payable Management Impacts Profitability

1. Vendor Relationships

Probably goes without saying, but it’s still important to mention: always pay your bills on time. Managing accounts payable is the first step to benefiting your bottom line.

Your ability to pay on time and in accordance with the agreement will not only prevent you from incurring unnecessary late fees on your bills, but it will also protect your credit history from bad marks while assisting you in building a good working relationship with your vendors and suppliers.

As a result, your business will have established a sterling reputation for repayment, which will enable you to take advantage of the best terms and conditions when it comes to cash flow-friendly payment of inventory and other supplies (including the best rates and payment due dates). Credit cards can be a great way for businesses to reduce overall expenses and increase profits.

You’ll also be more likely to work with a vendor if you run into a problem when you need to pay them, since they’re familiar with you and have a stellar history.

Besides paying on time, making payments early may also increase your profitability. You might assume that holding onto your cash for as long as possible and paying your vendors at the last minute is always the best strategy for payables. Even though this might be true – especially if you experience frequent cash flow shortages – paying early can sometimes be advantageous.

When you pay your invoice or statement ahead of the due date, many suppliers offer a discount for early payment. Pay early if your cash flow is strong and your cash flow is positive. Profit margins will grow as a result.

2. Better (or Worse) Cash Flow

In order to stay in business and be profitable, it is crucial to manage cash flow well. Accounts payable management can have a significant impact on your cash flow and, consequently, on your profitability.

Keeping cash in your business for as long as possible (by extending accounts payable days) can improve cash flow if your company is suffering from cash flow shortages. Therefore, if you’re short on funds, wait until the bill is due before paying it.

A longer repayment period or delaying payment will enable you to keep more cash available for your business. This ensures that your business’s cash is flowing out in a timely fashion. In a cash-flow pinch, prioritize your payables by focusing on those due now, ones past-due, and those with the highest interest rates.

Take advantage of your good relationships with your suppliers now if you think you might be facing cash flow problems. Let your vendors know what’s happening and ask them if they can accommodate your needs until your cash flow improves. If you risk tarnishing the relationship or not being paid, you will likely have more difficulty getting your suppliers to repay your debts.

You will be able to avoid cash flow shortages if you pay close attention to your payables and the effect they have on your cash flow.

3. Hours Spent on Manual Work

Paying bills is something everyone is familiar with. Paying bills takes more than a few seconds in a business.

We can’t emphasize enough how important automation is (As experts in “Zero Entry Accounting”, we are experts at automating the back office. When clients come to us, we see the problems caused without automation.)

During the course of your business, you will likely work with more suppliers and vendors, each with a different cycle of billing and a different schedule of payment due dates. Some payments should be made early and some on time. Others may offer electronic payment options, while others will require a check.

It takes some time to open envelopes, read physical invoices, approve expenses, cut checks and sign into secure payment servers (both yours and the employees’). Accounts payable management requires a tremendous amount of resources when handled manually – just to send money out!

It is therefore imperative that you automate your accounts payable function. Accounting automation will help you save time and also help you reduce overhead costs and cut labor costs associated with bill payment.

Further, automating processes will allow your employees to focus on higher-value projects that are intended to generate revenue instead of spending money. Increasing productivity and boosting the bottom line are guaranteed with automated accounts payable management.

Automate Accounts Payable Management With a Fully Integrated Back Office

It doesn’t matter how many vendors you work with or how many bills you have to pay, your business will benefit from automating a variety of processes, including accounts payable.

You will be able to save time double-checking invoices, paying bills, and signing checks, along with keeping a complete record of all your business expenses. With your receipts automatically categorized and up-to-date, audits will be simplified, tax filings will be simplified, and report generation will be simplified and streamlined.

Therefore, you won’t only have less headaches paying your company’s bills, you’ll also ensure that you’re making the most of every payment you make.

 

Various Functions Of Payroll Management

Quickbooks Training

Quickbooks TrainingPayroll is an extremely important function of any business – whether you have one employee or an entire workforce. But payroll is a complicated process and involves much more than simply ensuring that each employee is paid on time. Payroll management involves various functions to ensure employees are paid correctly in compliance with government regulations.

1. Processing Paychecks

Processing paychecks is the primary function of payroll management. Make the smallest error in one paycheck and it will quickly become apparent just how negatively this can affect the entire workforce and operation of a business. A payroll manager therefore needs to ensure that each employee’s compensation is calculated correctly in accordance with their employment contract.

Aspects of compensation that need to be verified include:

– The net salary of an employee.
– Their hourly work rate.
– Compensation for overtime
– Commission
– Incentives
– Any other amount that is a form of income

Additional factors that need to be taken into account include:

– Vacation time
– Sick leave
– Maternity leave
– Compassionate leave
– Holiday pay

Common deductions that need to be factored in include”

– Federal income tax
– Health or dental insurance contributions.
– Pension fund contributions
– Repayment of a company loan
– Any other deductions or contributions that have been agreed upon between employer and employee.

Additional Bonuses And Perks

– A car allowance
– Housing allowance
– Mobile phone allowance
– Clothing allowance
– Entertainment allowance
– Any other perk or added incentive offered to the employee by the company.

2. Payroll Taxes

It’s not just your employees who are going to be seriously unhappy when your payroll is not processed correctly. The IRS receives 70% of its annual revenue from payroll taxes. Your company can face severe penalties that could be very costly for failure to pay payroll taxes or by paying erroneous taxes. The IRS penalizes businesses with billions of dollars every year.

A payroll manager needs to be aware of the different tax rates that apply to different regions in the country and make the correct deductions from an employee’s income. They also need to fill in various forms to record and document payroll taxes including W-2’s for every employee by the end of January each year. Form 941 also needs to be completed and submitted every quarter detailing employment taxes that are withheld for contributions. These documents need to be completed accurately and on time to avoid penalties. Training, skills and experience are therefore critical in a payroll manager.

3. Record Keeping

The Fair Labor Act requires that an employer keep accurate records for each employee that is not exempt. The following information in employee and payroll records are required:

– Full name and surname of employee and social security number
– Physical or residential address including the zip code
– Date of birth for employees under the age of 19 years
– Gender and occupation
– The day of the week and time when an employee’s work week starts
– The hours that are worked every day
– Total work hours that are completed each workweek
– Rate at which the employee is paid – hourly, daily, weekly or monthly including the amount.
– The regular pay rate per hour
– The total weekly or daily straight-time earnings.
– The total overtime income for each workweek.
– All deductions from and additions to employee’s wages or income.
– The total wages that are paid over each pay period.
– The date when payment is made and the pay period that is covered by that payment.

The FLSA regulations also require that all payroll records should be kept for a period of at least three years. Records showing wage calculations need to be held for two years – for example, work timetables, time cards and other relevant documents. The payroll manager should ensure that these documents are stored electronically and backed up to be inspected by the Department of Labor at any time.

4. Employee Accessibility

While it is a legal requirement for payroll records to be made available to the DOL, employees should also be granted access to their personal payroll information upon request. A secure online portal provides a means for employees to access their personal information including:

– Summary of benefits
– Summary of pension fund or 401(k)
– Summary of deductions and history
– Details of direct payments
– Time clocks
– Paid leave or time off work

UptoDate Bookkeeping solutions also provides employees with the ability to download and print documents such as W-2s, make changes to tax settings and make online payroll inquiries. This empowers your employees with the knowledge that they need when tax season arrives.

5. Simplifying Payroll Management

Payroll is complicated and a dedicated HR department to handle all the responsibilities that come with payroll simply isn’t in the budget for every company. Outsourcing payroll management and administration with UptoDate Bookkeeping is a convenient and affordable solution to provide business owners with the peace of mind that every aspect of their payroll is being handled expertly and in compliance with the required regulations.

Thinking about hiring an outside company to do your Payroll?

payroll services minnesotaThere are many benefits that you can expect from hiring an payroll service company. It allows you to make savings and free up time to use in other aspects of your business. Outsourcing tasks that are not the core services of the business can be a good idea, both for small and big businesses. Having an internal department to deal with these services can be more expensive than outsourcing to a third party. Additional costs like training also adds to the cost of an internal payroll department. Payroll presents challenges to businesses regardless of the size.

What can a payroll company do for you?

Payroll companies specialize in payroll service. We will make sure that employees are paid on time and all the legal obligations are met. Our focus is on payroll and human resource tasks, and this ensures that we will take the worry out of the payroll processes. You will now have the chance to focus on your business instead of having to worry about how and when your employees will get paid.

Payroll is more than just writing checks and making payments through direct deposit. Payroll companies are tasked with handling a wide range of duties such as;

• Monitoring employee time and attendance
• Ensuring overtime pay is paid
• Setting up and making adjustments to direct deposit accounts
• Calculating payroll taxes and ensuring correct deductions
• Integrating third-party 401 (k) and benefit plans
• Compliance with federal and state payroll laws
• Electronic payroll records to both employers and employees

We provide systems that ensure all necessary information has been captured. Employees are also able to log in and view, print and save pay stubs.

We will give you peace of mind.