Creditors and Accounts Payable

People or organisations to whom you owe money are called creditors. A creditor is a supplier or vendor who will normally invoice you for goods or services supplied to you. At some stage after this you will pay the invoice. The process of managing creditors is often referred to as Accounts Payable.

When you receive an invoice you should enter it as a Purchase Invoice, and post it. This updates the balances in the payables ledger and the general ledger (and possibly the stock). If you are going to pay the invoice immediately, you can treat it as a straight payment.

When you come to pay the invoice at a later date, you do not need to re-enter it. Instead you make a special kind of payment, or you can use the Batch Creditor Payments command to pay a number of invoices. Paying an invoice will adjust your bank account, and also reduce the amount of money you owe.

MoneyWorks allows you to pay creditors either by cheque (it will print the cheques for you), or it can prepare a file of payments that can be submitted to many bank’s on-line banking systems, and even prepare emails to alert the creditor that payment has been made.

This chapter covers:

• receiving and recording invoices from suppliers
• paying invoices (using cheques or electronically)
• taking advantage of prompt payment discounts
• overpaying creditors (which, oddly, some people want to do!)