AP Reports in Your Business

The ‘AP’ in AP reports stands for accounts payable. AP report accounting is a method of tracking the money your business is spending in order to ensure that your business data is accurate. Without accurate and up-to-date AP reports, you have little way of knowing whether your business cash flow is as healthy as it ought to be, and whether the income generated is sufficient to meet your expenses. 

AP report timescale

AP reports are time-sensitive: the financial details recorded on the AP report apply to a specific period of time and need to be linked to other business data from that period. In most cases, AP reports are produced monthly, enabling them to be synched with recurring business payments such as:

• Rental fees

• Mortgage payments 

• Utility bills

• Loan repayments

• The operating costs of your business

As well as on-going, recurring debts, AP reports can include the cost of one-off payments for things such as new plant or machinery, or the costs involved with a marketing blitz. 

AP report accounting in practice

When running AP business reports, consider the three major types of AP report: the AP ageing report, account reconciliation report and history of payments report. These AP reports works as follows:

AP ageing report

This helps your accounts department to manage the invoicing process and keep up to date with due dates on vendor payments. This AP report usually lists the vendors down one side, with the past due periods detailed next to each vendor. This figure is usually expressed as something like 1–30 days or 31–60 days. The total amount due for each row and vendor are listed in another column. Gathering all this information together enables your business to stay on top of expenses and payment terms. 

Account reconciliation report

This AP report logs the business debts over a specific time period. Keeping this report up to date enables you to quickly ensure that the right debts are being paid to the correct vendors. It can also be checked against the general ledger of a business to ensure that there are no discrepancies between the two. Differences between the account reconciliation report and the general ledger indicate human error in accounting or the wrong payments being made.  

History of payments report

This report lists all of your business expenses over a specific time frame. It includes expenses such as:

• Raw materials

• Private loan repayments

• Utility payments

For each expense listed, the report records the total funds spent, and thus the total funds overall. Understanding how much your total expenditures amount to is vital if your business is going to be viable in the longer term, as this ensures that the expenses you accrue don’t outstrip your operational budgets. 

There are several ways to improve your AP reports, including the following:

• Setting up reminders – automated reminders ensure that invoices aren’t forgotten or mislaid. Without such reminders, human error could lead to payments being missed, which is highly damaging for your relationship with vendors and could generate late payment charges. 

• Archiving data – this relates to invoices enabling you to compile reports on spending patterns, as well as making it easier to deal with recurring payments. 

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.