How to Manage the Accounts Payable Process

Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law. Again, if you only have a few vendors to pay, this may not be an issue, but even if you have to pay just five vendors monthly, your life will be much easier if you use accounting software. If you’re used to managing your own personal bills, you should have no problem transitioning to the accounts payable process. However, there are a few things you need to do in order to prepare and process accounts payable properly. When accounts payable items are paid, the accounts payable account is debited, with cash credited.

For an ongoing project, businesses can send interim invoices upon completing a portion of the project. However, the amount charged might not be consistent, depending on the agreement between the seller and the customer. At a glance, a bill and an invoice may look too similar to distinguish. Even though they share some similarities, there are slight differences in their usage. Whether you are sending or receiving these documents, it is essential to understand the differences between a bill and an invoice in order to issue or request each of them in the right situation.

Bill vs. invoice: What’s the difference?

Invoices, on the other hand, can be recurring and are commonly used for requesting timely payment from clients that have purchased goods and services on credit. It is a document that outlines the amount that a consumer owes for goods and services received and rendered. The purpose of an invoice is to request payment, at a specified payment term, such as net-30. And since an invoice serves as a demand for payment, it’s typically issued after the delivery of the purchased product or service. It details the overall products provided and services rendered, the amount of money that is owed for the said work, and both the seller and buyer’s contact information. If you only process two or three vendor invoices a month, processing them manually shouldn’t be difficult.

After Amber completes each order, she sends invoices to her customers to request payment. These invoices detail the types and quantities of pastries fulfilled in the order, her business contact details, billing information, the total amount owed, and the payment due date. The invoices serve as a formal request for payment, and Amber allows her customers 15 days to pay each invoice.

Step 4: Review and process payment for any invoices due

An invoice, also known as a sales invoice, is a commercial document made by business owners and freelancers to request payment from their clients. If you send your client an invoice, it’s unlikely that you’ll need to send a bill, too. Unlike bills and invoices, a statement won’t have detailed information about each sales transaction, but it will have information about whether your client’s account is in good standing or not. If it’s not already obvious, this means that business owners can receive a bill from their suppliers or vendors, like when they purchase new inventory.

You should enter every product or service you provide as a line item on your invoices. At the bottom of the invoice, add up all of the line items, and apply any tax charges. Businesses can use invoices to track what customers owe in total as a way to monitor cash flow.

How long should you give someone to pay an invoice?

A bill, often referred to as a billing statement, represents the amount of money owed by a customer to a business. A bill outlines the total amount owed for goods or services rendered. Bills typically come with an expectation of immediate payment, bills and invoices making them standard in retail businesses and restaurants where prompt settlement is common practice. Businesses that sell products or services on credit can send an invoice after delivering the goods or services, offering an option to pay later.

A quote, or a sales quote, is a document that provides an estimate of the total price you have to pay if you decide to buy from that vendor. In short, it is not the same as an invoice or a bill, as a quote cannot be used to request payment. The main difference between a bill and an invoice is the use context. While a bill is typically used in business-to-consumer (B2C) transactions, an invoice is more common in business-to-business or B2B payments. In short, an invoice means you are requesting money, and a bill means that you are required to pay for something. This simple financial vocabulary allows everyone to understand where their money must go and what obligations they have to suppliers, customers, or businesses.

Receipts are used as documentation to confirm that a customer has received the goods or services they paid for, and as a record that the business has been paid. A bill is a statement of charges outlining the amount a customer owes for goods received or services rendered. The purpose of a bill is to serve as legal evidence for the buyer and seller that a sales transaction took place. Bills are usually used for one-time, upfront payments such as a retail purchase.