As a business grows, so does the number of bills that arrive every day. How your accounts payable (AP) team handles that expanding workload can have a big impact on the company’s cash flow, supplier relationships and business credit rating. AP reports provide essential insights into outstanding liabilities, upcoming due dates and recent disbursements, helping to ensure timely payment of vendor bills and strong supplier relationships. Here are some of the most important AP reports — and ways to improve the AP process.
What Are Accounts Payable Reports?
Accounts payable reports provide information about past-due invoices, upcoming payment dates and recently paid bills. This information gives business leaders a clear picture of cash outflows and liabilities, helps account prioritize and schedule bill payments, and informs other cash management decisions. AP reports can also provide insights that helps control costs and reduce the risk of payment fraud. Companies can use a variety of standard and custom reports to analyze their spend and monitor the efficiency of the AP process. For example, reports are used to schedule payments, track spending by department or location, and identify duplicate or fraudulent vendor bills.
Key Takeaways
- Accounts payable reports provide detailed insights into a company’s unpaid and paid bills.
- AP reports can help organizations manage cash flow, build stronger supplier relationships, take advantage of early-payment discounts, improve their credit rating and reduce the risk of fraud.
- They can be used to check the accuracy of payment records and analyze spending by department, location, category or project.
- AP reports also help companies monitor, control and improve the efficiency of the AP process.
Accounts Payable Reports Explained
Accurate AP data is crucial to ensure a business is using its cash effectively and not allowing liabilities to remain on the balance sheet too long. AP reports provide information that can help companies improve cash flow, ensure vendors are paid on time, secure early-payment discounts and avoid fraudulent payments.
For any growing business, maintaining good relationships with suppliers is critical. But as the number of vendor bills grows, it becomes more likely that some will fall through the cracks and won’t get paid on time. Late payments not only hurt supplier relationships, they can lead to higher prices and late fees. After all, happy suppliers are more likely to extend favorable payment terms, while unhappy suppliers may slow down shipments or cancel your orders altogether, resulting in lost revenue due to stock outs. Late payments can also affect a company’s credit rating, making it harder to get loans or secure a line of credit.
On the other hand, paying bills as soon as they arrive isn’t the best approach either. It can lead to a cash shortfall, making it difficult to meet payroll, invest in marketing or take advantage of other business opportunities. AP reports shed light on cash requirements, helping optimize cash flow by ensuring a business isn’t paying bills earlier than necessary.
AP reports can also be used verify that vendor bills are accurate and that payment has been approved by the appropriate person, reducing the risk of overpayment, duplicate payment or fraudulent payments. Detailed AP reporting also simplifies audits and tax preparation by helping ensure expenses are coded to the correct GL account.
Most Common Accounts Payable Reports
Some of the most common AP reports display critical information that helps companies prioritize which bills to pay, confirm that payments were made on time, and monitor spending by category, cost center or other criteria.
Accounts payable aging report
The AP aging report helps the company identify which bills are past due and prioritize which ones to pay first. Aging reports group outstanding payables by due date, typically in 30-day increments: current bills (not overdue), 1-30 days past due, 31-60 days, 61-90 days, and more than 90 days overdue. Businesses should run AP aging reports at least monthly, but many companies run them weekly. The detailed information in the AP aging report can also be used to monitor days payable outstanding (DPO), a key AP metric that tracks the average number of days it takes a company to pay its bills.
Payment history report
The payment history report captures all expenditures during a specific accounting period, typically grouped by expense category, or sometimes by vendor. Depending on how the report is structured, it either provides a summary view of spending by category or a detailed list of every payment. Payment history is useful for comparing actual spend with the annual budget and monthly forecasts. Monitoring budgeted expenses versus actual expenditures can help prevent future financial strain by alerting the company to a potential cash shortfall.
Voucher activity report
A voucher activity report provides detailed information that can be used to track expenditures by project, location or department. Vouchers document payment of vendor bills and act as internal controls to ensure payments are authorized by the appropriate person in accordance with internal approval hierarchies and disbursement policies. Voucher activity reports can be narrowed down to examine the payments that specific groups or projects have made, as well as the payments that will be due.
AP trial balance report
The AP trial balance report summarizes expenditures by date, and may also group them by vendor or other category. At minimum, this report should be run at the end of an accounting period, but many companies run it more frequently. The AP trial balance shows the debits and credits to each GL account. It can be used to ensure the accounts balance and that expenses have been coded correctly.
Top vendor report
As its name suggests, this report lists the company’s top suppliers, as measured by how much the company spends with each supplier. The report can help prioritize payments by showing who is owed the most money and which balances need to be paid first, depending on the vendor’s terms and their importance to your business. This report can be useful when forecasting future expenses for specific vendors and when negotiating contracts and volume discounts.
Credit memo report
Credit memos are adjustments to vendor bills that reduce the amount of a current bill or can be used to offset future bills. Vendors may issue credit memos because goods were damaged in shipment, returned or priced incorrectly. A credit memo report shows the total amount of credits available by vendor and helps ensure they are applied to future invoices.
Discount report
Discount reports are useful for helping the company identify potential savings opportunities. They show the early-payment and other discounts the company receives from its vendors. With this information the company can decide which payments to prioritize and flag any discounts that may have been overlooked.
Recurring invoice report
Recurring invoice reports track bills like rent, utilities and subscriptions that are received on a regular schedule. They act as checklists for making sure bills are being paid on time and for alerting the AP department to anomalies, such as unusually high invoice amounts, that may require investigation. These reports are invaluable for forecasting spending, because invoice totals tend to be relatively consistent. Some AP automation solutions can pay these bills automatically if amounts fall within predefined thresholds, and alert AP staff automatically if a bill totals fall outside these thresholds and require review.
Accounts payable GL code report
This report helps the company check that expenses have been coded the correct general ledger account. Correct GL coding is essential to ensure financial reports are accurate. Errors can provide a distorted picture of cash outflows and, in the case of a publicly-traded companies, require financial results to be restated. This can damage a company’s reputation and reduce its stock value.
AP turnover report
This report tracks the performance of the AP process by monitoring trends in the AP turnover ratio, a KPI that reflects how quickly the company pays its creditors. A high AP turnover ratio shows that a business pays its bills quickly, which may improve its standing with lenders and creditors. If the company’s AP turnover ratio declines from one period to the next, it could be a sign that the company is having difficulty paying its bills.
Real-time AP dashboards
Dashboards provide the AP group with an at-a-glance view of the information they need to monitor the company’s spending and keep the AP process running smoothly. Dashboards automatically display up-to-date information that includes KPIs and links to important AP reports, making it possible to drill down for more detail and to investigate trends and anomalies. Dashboards can also be used to track overall AP department efficiency metrics. Leading accounting solutions allow dashboards to be customized for different roles and user requirements.
Improve the AP Process
The efficiency of the AP process is an important contributor to a company’s overall success. The information in AP reports can highlight areas for improvement. But there are also many other ways to improve the AP process. Here are some of the most common.
6 Ways to Improve the AP Process
| Improvement | Benefit |
|---|---|
| Set up reminders. | Payment reminders help prevent missed due dates and late-payments fees. |
| Archive everything. | Digital records of data associated with every bill can help resolve vendor questions, analyze historical information and comply with audits. |
| Update contact information. | Accurate contact information ensures that payments go to the right place — and it speeds up problem resolution. |
| Pay early when it makes sense. | Early-payment discounts can save money, but there may be wiser ways to spend cash — take time to determine when early payment makes sense. |
| Optimize the approval process. | AP systems can automatically pay bills that meet predefined criteria and route other bills to appropriate approvers. |
| Automate the entire AP workflow. | Leading AP systems can increase the efficiency and accuracy of the AP process. They automatically extract information from vendor bills, match bills to invoices, speed approvals and remit payments. |
Set up reminders.
Automated reminders are one of the simplest tools for ensuring that bills are paid at the right time. As a business grows, the sheer number of bills can become overwhelming — and extremely difficult to track manually. As a result, payment dates may be missed, damaging vendor relationships and potentially triggering fees. With leading AP systems, you can set up customizable reminders that automatically prompt AP staff before bills are due, helping make sure that payments are made on time.
Archive everything.
In the digital age, there are few excuses for not maintaining detailed records of every vendor’s billing history. Practically every stage in each transaction can be recorded and stored in digital form, making it easier to respond to vendor questions and find historical documentation when you need it. In the event of an audit, all necessary records are easily accessible and accurate. When records are securely stored in digital form — as opposed to paper documents stuffed into filing cabinets — it’s also easier to enforce access controls to guarantee that only authorized staff can retrieve important financial data.
Critically, maintaining paper records means they're often stored somewhere that isn't easily accessible, documents can't be access by multiple people at the same time, and they are often misfiled or lost. Paper-based record keeping is cumbersome and inefficient.
Update contact information.
Keeping a comprehensive and accurate database of vendor information can help confirm that payments go to the right place, which, in turn, promotes good supplier relationships. Up-to-date information, such as vendor name, contact person information, and correct email and physical addresses and phone numbers, can make everyday communications and problem resolution quick and relatively painless. Similarly, contact logs can help AP staff verify that your vendors have been notified of any changes in your contact information.
Pay early when it makes sense.
For some bills, it makes sense to pay quickly to take advantage of suppliers’ early-payment discounts. Even small discounts can quickly add up and make a difference to your profit margins. However, it’s important to consider the broader financial implications before rushing to pay early. If a vendor doesn’t offer early-payment discounts, it generally better to hold on to cash instead of pay bills before they are due.
Optimize the approval process.
Slow invoice review and approval can delay payments, canceling out the efficiency benefits of improvements made elsewhere in the accounts payable process. If the approval step is holding up supplier payment — or if you find some payments are bypassing the approval process — it’s time to reevaluate how your approvals are handled. Some AP systems can speed approvals and reduce the AP workload by automatically paying recurring bills that fall within predefined thresholds and routing other bills to the appropriate approvers.
Automate the entire AP workflow.
While automating individual AP processing steps can save time and money, much broader benefits can be achieved by applying automation to modernize the entire AP workflow. Manual data entry and invoice processing are inherently time-consuming and error-prone, causing problems that can impact your relationships with suppliers and take staff hours to resolve. AP systems can automatically extract information from vendor bills, match bills to invoices, speed approvals and send payments. Automating the process can increase accuracy, help staff keep tabs on bill payment and improve supplier relationships.
Seeing a lot in that list that QuickBooks can’t do?
How Accounting Software Can Help With Accounts Payable Reporting
NetSuite Cloud Accounting Software simplifies and automates AP reporting and other AP processes, saving time, increasing accuracy and allowing AP staff to focus their time on exceptions instead of repetitive manual tasks. NetSuite automates the capture, review, approval and payment of vendor bills, giving businesses greater control over the entire AP process. Configurable dashboards, reminders and alerts enable the AP team to track invoices, scheduled payments and other important information in real-time, while standard and custom KPIs help the company keep tabs on AP performance.
As a business grows and bills pile up, AP reports can help companies manage cash flow, ensure that they pay vendors on time, improve supplier relationships and detect fraud. The information in AP reports also can help the company track and improve the efficiency of the AP process.
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Accounts Payable Reports FAQs
Why is AP reporting important?
Regular AP reporting helps businesses optimize cash flow and maintain good supplier relationships by ensuring that the accounts payable process is working efficiently and that bills are paid on time. Reporting helps accounts payable avoid missing payments or making payment errors. AP reporting helps businesses create better vendor relationships and make sure that it is seizing early-payment discount opportunities.
What is an accounts payable aging report?
The AP aging report shows all outstanding balances categorized by due date. It helps companies track which bills are overdue and which payments to prioritize.
What is a vendor in accounts payable?
The vendors listed in accounts payable are third parties that supply goods or services on credit.
What are the 4 functions of accounts payable?
Functions of accounts payable include tracking expenses, processing bills from vendors, paying those bills and correctly categorizing and documenting expenditures.
What is an open AP report?
An open AP report shows all bills that still need to be paid.
What are examples of payable accounts?
A payable account represents amounts owed to suppliers. Examples include raw materials, inventory, office supplies, rent and utilities.
Where is accounts payable reported?
Accounts payable is reported on the current liabilities section of a company’s balance sheet, since it is expected that the amounts owed will be paid within 12 months.
