All businesses that extend credit to your business are called vendors. A vendor ledger must be setup to manage the amounts owed to the vendors.
The vendor ledgers should be updated when invoices are posted in the General Ledger. In a computerized system, the software will automatically update the Accounts Payable account accordingly.
Paying vendors on time and correctly boosts your company’s credit rating, and may help you in obtaining favorable credit terms with your vendors.
