Which document should you record to track how much money your business owes at any point during the billing cycle?

To effectively track how much money your business owes during the billing cycle, recording vendor bills is essential. Vendor bills are the documents that represent the amount due to suppliers or vendors for goods or services received. They detail the transaction and specify the payment terms, making it clear what obligations your business has to fulfill.

By recording each vendor bill, you create a comprehensive view of your outstanding liabilities. This helps in managing cash flow and ensuring that payments to vendors are made on time, thus avoiding late fees or strained relationships with suppliers. Tracking vendor bills is critical for accurate financial reporting and for maintaining a strong financial position.

In contrast, vendor payments reflect amounts that have already been paid, customer invoices concern amounts owed to your business by customers, and expense reports are typically used for internal tracking of employee expenses rather than tracking overall liabilities.