Bookkeeper Mock Interview
Practice 30 Bookkeeper interview questions covering reconciliation, accuracy, and accounting software proficiency.
Question 30 of 30
True or False: For vendor invoices, it is always best to pay the bill as soon as possible.
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Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
This is a bit of a trick question and tests your understanding of cash flow. As a general rule of thumb, it is almost always better to receive cash from customers as quickly as possible and pay vendors as slowly as possible (while still adhering to the payment terms). The goal of doing this is to maximize cash on hand which provides flexibility for the company.
Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
"That statement is false. When it comes to Accounts Payable and the payment of invoices, it is better to use the vendor payment terms to our advantage. If we pay bills as soon as they are received, that ties up cash that could have been used for other purposes. The only time it may be advantageous to pay sooner than the due date is if there is a discount for paying earlier."
I am a CPA with over 12 years of bookkeeping experience.
That is false. It is not always best to pay vendor invoices as soon as you receive them unless there is a deduction associated with closing the invoice early. It is best to utilize the invoice payment terms because it allows us to maintain an average cash flow. By paying early, you risk the chance of tying up cash that is needed elsewhere. That is my opinion on paying vendor invoice payments early.
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