Elements Of The Accounting System: Accounts PayableWhom do you owe? Keep track with the accounts payable ledger.

The accounts payable subledger is similar to that used to trackaccounts receivable. The difference is that accounts payable occurwhen you purchase inventory or other assets on credit from asupplier.

It is important to track accounts payable in a timely manner toensure that you know how much you owe each supplier and whenpayment is due. Many a good supplier relationship has been damageddue to a sloppy accounts payable system. Also, if your suppliersoffer discounts for payment within 10 days of invoice, a goodautomated accounts payable system will alert you when to pay tomaximize the discounts earned.

Excerpted fromStart Your Own Business: The Only Start-UpBook You'll Ever Need, by Rieva Lesonsky and the Staff ofEntrepreneur Magazine, © 1998 Entrepreneur Press