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Updated Apr 09, 2024

The Complete Guide to Accounts Payable Reporting

Ensure accurate financial data and on-time bill payments.

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Jamie Johnson, Senior Analyst & Expert on Business Operations
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Accounts payable (AP) is the money your business owes its vendors and suppliers. These purchases may include rent, utilities, inventory and the cost of doing business. When you make a purchase, the vendor or supplier invoices you. You then make the payment at a later date. 

In comparison, accounts payable reporting is the process of tracking and reporting these business expenses. This ongoing reporting process ensures your business maintains accurate financial records.

Editor’s note: Looking for the right accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Why is accounts payable reporting important?

Businesses of all sizes can benefit from an accounts payable process that includes accurate reporting. However, an accurate accounts payable reporting process is particularly crucial for small business accounting. You must know whether you’re paying invoices on time and paying the correct amounts.

Here are a few reasons why accounts payable reporting matters:

  • Accounts payable reporting ensures bills have been paid: Accounts payable reporting helps a business track credit spending and ensures bills are paid on time. If your business consistently pays its vendors late, your credit rating could suffer. A poor business credit score can impact future lending decisions negatively. 
  • Accounts payable reporting prepares you for tax season: For small business owners, taxes matter all year ― not just during tax season. Accounts payable reporting ensures all your financial information is to streamline tax preparation. An accurate accounts payable reporting process makes collaborating with your accountant and meeting tax deadlines easier.
  • Accounts payable reporting helps you maintain a good relationship with suppliers: Staying on top of your accounts payable reporting helps your business maintain positive, trusting relationships with suppliers. Excellent supplier relationships can lead to more favorable payment terms or opportunities to save money with early payment discounts.
  • Accounts payable reporting ensures accurate financial records: Accounts payable reporting ensures your company’s financial data is correct. Accurate information can help you gauge your working capital, determine which invoices must be paid and document issues as they arise.
FYIDid you know
Accounts payable and accounts receivable (AR) both play a crucial role in daily business operations. Accounts payable is the money you owe suppliers and vendors. AR refers to the funds you earn from product and service sales.

Types of accounts payable reports

Let’s look at some of the most common types of accounts payable reports your business will run.

Invoice aging report

An invoice aging report includes a list of all unpaid accounts payable invoices. This information can help determine how much the business owes and which invoices must be paid first. 

An invoice aging report includes details like the following:

  • Vendor names
  • The amount you owe each vendor
  • When the invoice is due
  • How long you’ve held the debt

An invoice aging report will help you spot missed payments and see how far past due an invoice is. To avoid getting behind on vendor payments, you should run an invoice aging report daily or weekly. 

AP trial balance

The AP trial balance lists the ending balance in each general ledger account and includes any unpaid or partially paid invoices. This report ensures a business’s debts match its credits and that all journal entries are accurate.

Generating an AP trial balance is similar to balancing a checkbook. It reviews all payments to ensure they match the total amount due. If you accidentally overpay a vendor or miss a payment altogether, your AP trial balance will help you catch this. If your credits and debits don’t match, it could be because your business received inventory but hasn’t yet received the invoice. Once you’ve received the invoice, your accounts will reflect that.

Did You Know?Did you know
Invoice aging reports can help you manage cash flow, plan for future expenses, determine which vendors to pay first and find ways to negotiate payment terms.

Voucher activity report

A payment voucher is a document businesses use to track supporting information needed to approve an invoice payment. It’s an internal auditing control that ensures each invoice is paid and that the company receives the goods and services.

A voucher activity report includes the following information:

  • A vendor’s name
  • The company’s purchase order
  • The total amount due
  • The due date
  • Discount terms offered

A voucher activity report tracks payment vouchers made over a specific period. It can help you see how much the business spent on a particular project or how much you’re spending in different departments. 

TipBottom line
It's a good idea to generate an AP trial balance monthly or quarterly. Running the report too soon could lead to inaccurate financial accounting information.

Reconciliation of accounts

The open reconciliation report shows all accounting activity concerning payment vouchers over a specific period. This report helps you determine whether your business makes accurate and timely payments to its vendors.

You can use the open reconciliation report to check for unpaid liabilities. This report will also show whether you’re sending payments to the correct vendor.

Inaccurate reporting and missed payments can cause differences in the ledger. Account reconciliation can also help you spot any issues with fraud.  

Payment history report

A payment history report details payments you’ve made over a specific period. This report can help you see how much you’ve paid a particular vendor. It can also help with budgeting because you can see how much you’ve spent in a certain category. 

Recurring invoice report

Every company has monthly recurring bills, such as rent, insurance payments or software subscriptions. A recurring invoice report helps ensure these bills are paid on time and makes forecasting spending easier. This report can also make it easier for the AP department to flag any unusually high or low bills.

Discount report

Many vendors offer an early payment discount to companies that pay invoices in full before the due date. A discount report can help your business take advantage of early payment discounts. It’ll show you the early payment discounts you’re currently receiving from vendors and identify opportunities to save that you’ve previously overlooked. 

Credit memo report

A credit memo is an adjustment that either reduces the amount of a current vendor bill or lowers future bills. Credit memos can be issued for various reasons, including product returns or incorrect pricing. A credit memo report shows how many credits are currently available so your company can apply them to future invoices.  

Top vendor report

A top vendor report ranks your company’s top suppliers based on the volume and value of transactions. This report can help you determine which vendors are most crucial to your business and which invoices should be paid first. It can also help you negotiate more favorable terms with your suppliers. 

AP turnover report

An AP turnover report tracks the efficiency of your company’s AP process and shows how quickly your business pays its vendors and creditors. A high turnover ratio means your company is paying its bills quickly, while a low ratio could indicate you’re having difficulty paying its bills. 

How to improve the accounts payable process

Improving the AP process can help your company free up working capital and reduce business expenses overall. Here are some steps you can take to improve the AP process:

  • Go paperless: If you haven’t already, your company should consider switching to electronic statements and invoices. Going paperless will make it easier to track your outstanding bills and reduce the risk of human error. 
  • Store vendor data in one location: Create a centralized database to store vendor information and contract details. It’s best to store this information electronically so you can easily update it if anything changes.
  • Evaluate vendor relationships: It’s a good idea to regularly review your existing vendor relationships and look for opportunities to negotiate better payment terms. This evaluation can also help you discover ways to improve those relationships.
  • Create better workflows: Look for ways to improve your existing workflows and streamline the efficiency of your AP process. Doing this will help you reduce bottlenecks and minimize the time your team is spending on accounts payable. 
TipBottom line
Automating your accounts payable process can improve accuracy, efficiency and oversight.

How accounting software can help with accounts payable reporting

Accounting software is the best way to stay on top of your AP reporting. Instead of manually entering your financial data, the best accounting software can do the heavy lifting for you while automatically generating reports and displaying payment trends over time. 

Here are a few ways accounting software can benefit your business:

  • View vendor information: Use accounting software to view information about a specific vendor. You can see how much you currently owe and how much your business has paid that vendor over the past year. You can also see if your company has any opportunities to save money by taking advantage of early payment discounts.
  • Retain accurate financial records: Entering your financial information manually is tedious and error-prone. Accounting software automatically syncs to your bank account and reconciles your financial transactions for you. And if your company is ever audited, accounting software will save you significant time because you’ll already have the financial data on hand.
  • Generate reports automatically: You can use your accounting software to generate financial reports for your business automatically. These reports help you track business expenses and see how much it currently owes. You can generate these reports as often as necessary. 
FYIDid you know
Check out our QuickBooks review and our review of Xero to learn about two excellent and affordable accounting solutions for small businesses.

Accounting software can streamline the AP process

As a business owner, you must stay on top of your accounts payable reporting. Tracking the most pertinent reports will ensure you stay on top of outstanding invoices and maintain a good relationship with your vendors. It will also help you keep accurate financial records. 

If you need help with your AP reporting, the right accounting software can make this process easier. Accounting software reduces the risk of human error and will generate these reports for you automatically. That way, you know your financial records are accurate and up to date.

author image
Jamie Johnson, Senior Analyst & Expert on Business Operations
Jamie Johnson has spent more than five years providing invaluable financial guidance to business owners, leading them through the financial intricacies of entrepreneurship. From offering investment lessons to recommending funding options, business loans and insurance, Johnson distills complex financial matters into easily understandable and actionable advice, empowering entrepreneurs to make informed decisions for their companies. As a business owner herself, she continually tests and refines her business strategies and services. Johnson's expertise is evident in her contributions to various finance publications, including Rocket Mortgage, InvestorPlace, Insurify and Credit Karma. Moreover, she has showcased her command of other B2B topics, ranging from sales and payroll to marketing and social media, with insights featured in esteemed outlets such as the U.S. Chamber of Commerce, CNN, USA Today, U.S. News & World Report and Business Insider.
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