There are many people out there that just love using Accounts Payable because the great reports it can generate to track your nonprofit’s bills. However, if you manage the books of a nonprofit or church with limited budgets and not a large volume of transactions, you may be on the fence as to whether your organization needs to make the jump from cutting a quick check to an Accounts Payable method of tracking your vendor bills and debts. Here are three quick ways to tell if you are ready to make the move.
1. You use a credit card
If you do fund accounting (and you probably should if you are a nonprofit) the simplest and most convenient way to track credit card transactions in your bookkeeping and make sure payments are tied to the appropriate fund is by using Accounts Payable in a fund accounting software. In addition, if you make partial payments on a credit card, this will help you track the overall remaining balance due on the card.
2. You don’t always pay bills immediately
There are many reasons why you may want to plan ahead about when you pay a bill. Maybe your cash flow varies week-to-week, your funding comes in large chunks or varies seasonally or you need to plan for some large expenses. Accounts Payable helps you track payments, tells you what is coming due and lets you know if you missed one. Nobody is perfect and eventually you are bound to lose track of a bill when your stack of papers just gets too high, so this will help you avoid late fees, keep a good relationship with your creditors and better manage your cash flow.
3. You make partial payments on bills or loans
Sometimes paying a bill isn’t as easy as cutting one check. For loans or large purchases like equipment, you may make a series of payments. In order to reflect these payments appropriately in your books and know the remaining balance, definitely plan on using Accounts Payable. This will help you avoid missing payments or overpaying and will add accountability with your board by being able to pull reports showing the transaction history.
Don’t be intimidated
No doubt, Accounts Payable can be tricky if you don’t use the right kind of software. Aplos Software kept it simple and designed it to work with your fund accounting when we built our Accounts Payable app for live Accounts Payable free webinar!