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3 min 37 sec
0:00
The other direction
0:22
Paid on the spot
0:36
Bills with time to pay
0:56
Trade creditors
1:18
Receipts and coding
1:41
Paying on time
2:00
Expenses in Beeswax
2:42
Recap and quiz
Accounting 101
·
Costs and timing
·
Episode 13
Expenses and Payables
(The money you owe everyone else.)
The other direction: the bills. Costs paid on the spot, bills with time to pay, and why money Maya owes her suppliers is a liability until she pays it.
expenses
bills
accounts payable
trade creditors
Transcript
0:00
So far, we've mostly followed money coming in. Today, the other direction. The bills.
0:06
Rent. Software. The freelance developer. The coffee that was definitely a business meeting. Every business has costs. The trick is recording them properly, and paying them at the right time.
0:22
Some costs are paid on the spot. Maya pays her co-working rent, eight hundred, straight from the bank. Debit rent, an expense. Credit bank.
0:32
Simple. The expense and the payment happen together.
0:36
Other costs arrive as a bill, with time to pay. Her developer sends a bill for eleven hundred and fifty, due in fourteen days.
0:45
The expense counts now. She's had the work. But the cash hasn't gone yet. So: debit contractors, an expense. Credit trade creditors.
0:56
Trade creditors, or accounts payable, is money you owe to suppliers. It's a liability. And yes, it's exactly the mirror image of trade debtors. Your payable is someone else's receivable.
1:08
Two weeks later, she pays it. Debit trade creditors. Credit bank. The expense doesn't move. It was counted when the bill arrived.
1:18
Now, a word about paperwork. Keep the receipt, or the bill, for every cost. The tax office will want evidence, and how long you keep it depends on where you are. Usually longer than you'd think.
1:31
And code each cost to the right expense account. Software goes to software. Rent goes to rent. Biscuits go to a very difficult conversation.
1:41
One more thing. Pay your bills on their due date. Not late. Being a good payer earns you goodwill, especially with freelancers. They talk.
1:51
But not the moment they land either. Money sitting in your bank for fourteen more days is money you can use. That's not rude. That's cash flow.
2:01
In Beeswax, bills come in the way they actually arrive. Forward the email, or snap the receipt on your phone.
2:08
Beeswax reads the supplier, the date, the total and the tax, and drafts the expense for you to check. It even spots duplicates, so the same bill doesn't get paid twice.
2:19
Check it, finalise it, and it posts. Debit the expense, credit trade creditors. And the bill appears in What I Owe, with its due date.
2:30
When you pay, record the payment. It's marked paid, and the payable is cleared. Expenses, by the way, are always red in Beeswax. Which feels about right.
2:42
So. Expenses count when you incur them. Bills with time to pay create a payable, a liability. Paying it clears the liability, not the expense. Keep the evidence. Pay on the due date.
2:57
Quick one. On the fifth, a software bill arrives for six hundred, due on the twentieth. Maya pays it on the twentieth. What are the two entries?
3:07
Have a think.
3:11
On the fifth: debit software, credit trade creditors. On the twentieth: debit trade creditors, credit bank. Six hundred each time.
3:21
Paid on time. Not a day early. Your developer thanks you. Your bank balance thanks you too.
3:28
Next time: which costs belong to which job. Direct costs, overheads, and whether a project actually made any money.