Why AR/AP Management Isn’t Optional Anymore!

Accounts Payable (AP) refers to the amount a business owes to its suppliers for goods or services received on credit. Accounts Receivable (AR) refers to the amount a business is owed by its customers for goods or services sold on credit. AP comes under liability side whereas AR comes under asset side.

Let's say you run a Bakery (Fancy, right?), and buy flour from a supplier on 30-day credit—this creates an ac

count payable of $2,000. At the same time, you sell some cookies to a corporate client on 15-day credit, generating an account receivable of $1,500. The amount you owe is AP ($2,000), and the amount you're expecting from the client is AR ($1,500). Both impact your cash flow planning.

Managing AR and AP is crucial to maintain healthy cash flow and avoid financial strain.

Get Paid Faster. Pay Smarter.

AR/AP are important to manage for many reasons these days. Be it a compliance requirement or an internal management need, maintaining proper Accounts Receivable and Accounts Payable is essential. It ensures timely collections, avoids payment delays, supports accurate financial reporting, and improves cash flow. A systematic approach to AR and AP keeps your business organised, efficient, and financially healthy. Clear and timely billing not only builds stronger customer relationships but also enhances your business’s credibility, showing professionalism, reliability, and trustworthiness. Early payment of accounts payable can sometimes earn supplier discounts, helping reduce costs and improve overall profitability for your business.

Accounts Receivable (AR) in Australia involves issuing tax invoices that comply with ATO regulations, especially for GST-registered businesses. Standard credit terms are typically 30 days. Timely monitoring of aging reports helps manage overdue payments and maintain steady cash flow. Under accrual accounting, GST must be paid to the ATO at the time of invoicing, regardless of payment receipt. AR is governed by AASB 9 for impairment and bad debt provisioning. Similarly, Accounts Payable (AP) in Australia requires maintaining accurate documentation such as supplier invoices and purchase orders. Businesses typically operate on payment terms ranging from 7 to 30 days. Timely payments help avoid interest charges, late fees, and supply disruptions. Under the accrual method, businesses can claim input tax credits for GST paid on eligible purchases even before the payment is made, helping improve cash flow and ensure compliance with ATO requirements.

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At LK Accounting and Advisory, we help businesses efficiently manage their Accounts Receivable (AR) and Accounts Payable (AP) using leading software like Xero, MYOB, QuickBooks, and Odoo. We ensure proper documentation, ABN validation for suppliers, and maintain audit-ready records as per ATO's 5-year requirement. Our services focus on accurate tracking, timely reporting, and reconciliation of AR and AP, helping you monitor your cash flow, calculate Net Working Capital, and plan better for business liquidity and compliance.

For AR, we help you issue tax-compliant invoices, track customer payments, and manage aging reports, ensuring timely collections and improved cash flow. For AP, we assist in maintaining proper records of supplier invoices and purchase orders, monitor due dates, and ensure timely payments to avoid interest charges, penalties, or supply disruptions. Proper management of AR and AP is critical to assessing your business’s liquidity, forecasting financial needs, and calculating Net Working Capital. By outsourcing these functions to us, you free up valuable time, reduce errors, and gain real-time visibility into your cash position.