Bookkeeping Basics · Edmonton
The accounts payable process for small business, made simple.
How to get bills in, approved, recorded, paid and reconciled without paying anything twice, missing a GST credit or losing track of what you owe.
By the Plum team- Updated Oct 2026
- 9 min read
- Accounts payable (AP) is what you owe suppliers. It's a liability.
- Enter each bill when it arrives: that records the expense and the GST credit.
- Pay from the bill, never as a fresh expense, or you'll double-count.
- Reconcile big suppliers' statements monthly and run an AP ageing report.
A solid accounts payable process for a small business answers three questions at any moment: what do we owe, to whom, and when is it due? Most owners carry those answers in their heads until the business gets busy enough that they can't. That's usually when a supplier gets paid twice, or a late fee shows up, or a stack of bills from the fall turns up in a truck door in April.
This guide sets out a five-step process you can run in an hour a week, with the journal entries behind it, the Canadian GST rules that matter, and how it looks in QuickBooks Online. It's written for the kinds of businesses we work with in Edmonton and area: trades, consultants, clinics, studios and shops with a handful of regular suppliers.
1What accounts payable means
When a supplier delivers goods or services and gives you a bill with payment terms, you owe them money. Under accrual bookkeeping, you record the expense when you receive the bill, not when you pay it. The amount owed sits on your balance sheet as a liability called accounts payable.
It's the mirror image of accounts receivable: AR is customers owing you, AP is you owing suppliers.
It matters for tax too. Whether you report as a sole proprietor on the T2125 or as a corporation on the T2, business expenses generally belong in the year you incurred them. A December bill you pay in January is usually a December expense, and if it never made it into your books, it never made it onto your return.
2A worked example: one bill, two entries
Say you run a renovation company in Sherwood Park. On May 10 your drywall supplier bills you $1,500 plus 5% GST for materials, due June 9.
Entry 1: you enter the bill
| Account | Debit | Credit |
|---|---|---|
| Job materials (cost of goods sold) | $1,500.00 | |
| GST/HST payable (input tax credit) | $75.00 | |
| Accounts payable | $1,575.00 | |
| Total | $1,575.00 | $1,575.00 |
Your May expenses go up $1,500, your GST owing goes down by the $75 credit, and you now owe the supplier $1,575.
Entry 2: you pay on June 5
| Account | Debit | Credit |
|---|---|---|
| Accounts payable | $1,575.00 | |
| Bank (chequing) | $1,575.00 | |
| Total | $1,575.00 | $1,575.00 |
No new expense. The liability is cleared and cash goes down. If you'd also categorized the June bank withdrawal as "materials," you'd have $3,000 of expenses for $1,500 of drywall.
3Do you need accounts payable at all?
Not every business does. If you pay almost everything by card or on the spot, recording each expense as it clears the bank is perfectly reasonable. The expense date and the payment date are the same, so there's nothing to track in between.
AP starts to pay off once you have suppliers who bill you on terms: a lumber yard account, a wholesaler, a subcontractor who invoices monthly, a software vendor that bills annually. Then entering bills gives you three things the bank feed can't:
- A true picture of what you owe. Your bank balance looks great right up until $8,000 of supplier bills come due the same week.
- Expenses in the right month. A bill dated in March belongs in March, even if you pay in April. That keeps your monthly profit honest.
- GST credits in the right period. You can usually claim the input tax credit when the bill is dated, not when you get around to paying it.
A middle ground many small businesses use: run AP for the handful of suppliers who bill on terms, and record everything else straight from the bank and credit card feeds.
4The accounts payable process in five steps
1. Capture every bill in one place
Ask suppliers to email bills to one dedicated address, and forward anything that arrives elsewhere. Paper bills get scanned or photographed the day they arrive. The goal is a single inbox where nothing gets lost.
2. Check and approve
Before a bill goes into the books, someone confirms you actually received what you're being charged for, the price matches the quote, and the GST is right. For trades, that also means tagging the bill to the right job.
3. Enter the bill
Record it with the bill date, due date, supplier, expense account and GST code. Attach the PDF. This is the moment the expense and the input tax credit hit your books.
4. Pay on schedule
Pick one or two payment days a week, run your unpaid bills list, and pay what's due before the next payment day. Batching payments takes far less time than paying bills one by one as they arrive, and it lets you plan cash.
5. Reconcile
Once a month, compare statements from your main suppliers against your AP. Then run an AP ageing report and make sure nothing is unexpectedly overdue.
5GST, input tax credits and your paperwork
If you're registered for GST, the 5% you pay on business purchases comes back to you as an input tax credit (ITC). A few Canadian rules affect your AP process directly:
- Timing. You can generally claim an ITC in the reporting period the GST was paid or became payable. A bill dated in your current period can usually be claimed now, even if you pay it next month.
- Documents. CRA requires supporting documents for ITCs, and the information required grows with the size of the purchase. For purchases of $100 or more, that includes the supplier's GST/HST registration number. Check new suppliers' bills before you enter them.
- Time limit. ITCs have a deadline, generally several years for most small businesses, but don't rely on it. Claim them in the period they belong to.
- Exempt and zero-rated supplies. Some bills carry no GST at all (insurance, bank fees, most residential rent). Use the right tax code so you don't claim a credit that doesn't exist.
For more on what you can claim, see our guide to input tax credits.
6How accounts payable works in QuickBooks Online
- Enter a bill: + New, then Bill. Choose the supplier, bill date, terms and due date, then the category (expense account) and GST tax code on each line. Attach the PDF.
- Pay bills: + New, then Pay bills. Select the bills to pay and the bank account. QuickBooks clears Accounts Payable for you.
- Match the bank feed: when the payment appears in your bank transactions, Match it to the bill payment. Don't Add it as a new expense.
- Unpaid bills and ageing: in Reports, look for Unpaid bills and the accounts payable ageing summary.
- Supplier credits: if a supplier issues a credit, enter it as a supplier credit and apply it to the next bill rather than editing old bills.
Some QuickBooks plans also let you forward bills to an email address that creates draft bills automatically. Even then, someone should review each one before it's saved.
7Common accounts payable mistakes
1. Double-counting expenses
The bill is entered, then the payment is categorized as an expense from the bank feed. Your expenses are doubled and the bill stays open in AP forever. Always match payments to bills.
2. Paying from the statement instead of the invoices
Supplier statements include old balances and sometimes items you've already paid. Pay specific bills, then use the statement to check, not to decide.
3. Entering a bill twice
The same invoice arrives by email and by mail. Check the supplier's open bills before entering, and use the supplier's invoice number in the bill number field. QuickBooks can warn you about duplicate bill numbers.
4. Missing GST on bills
Entering $1,575 all to "materials" instead of splitting $1,500 and $75 GST throws away your input tax credit. Over a year of supplier bills, that adds up quickly.
5. Stale bills nobody owes
An AP report full of old bills that were actually paid by card or cheque usually means payments were recorded as expenses instead of against the bill. Clean them up so your liabilities are real.
8Your weekly AP routine
Plum runs accounts payable for trades, clinics and service businesses across Edmonton, Sherwood Park, Spruce Grove and Fort Saskatchewan as part of our monthly plans. If you've got a pile of unentered bills, book a call and we'll sort out a process that fits how you work.
9Questions people ask
What is the accounts payable process?
It's the routine for handling the bills your business owes: receiving them, checking and approving them, recording them in your books, paying them on time and reconciling against supplier statements. A clear process stops double payments and missed credits.
Is accounts payable an expense?
No. Accounts payable is a liability: money you owe suppliers. The expense is recorded when you enter the bill. Paying the bill reduces the liability and your bank balance, with no new expense.
Can I claim GST on a bill I haven't paid yet?
Generally yes. You can usually claim an input tax credit in the reporting period the GST was paid or became payable, so a bill dated in March can go on your March period return even if you pay it in April, as long as you have proper supporting documents.
Do small businesses need to use accounts payable?
Not always. If you pay almost everything by card or on the spot, recording expenses as they clear the bank can be enough. Once you have suppliers who bill you on terms, entering bills gives you a much clearer picture of what you owe.
What is a vendor statement reconciliation?
It's comparing the statement a supplier sends you against the bills and payments in your books. Any difference points to a missing bill, a payment applied to the wrong invoice or a duplicate.
Want this off your plate?
Flat-fee bookkeeping for Edmonton small businesses. Month to month, no surprises.
Book a free 15-min callThis article is general information for Alberta businesses and isn't tax or legal advice. Rules and thresholds change, so confirm your situation with your accountant or CRA.