Use this simple 4-step approach, and you will never go far wrong:

1. Buy two large files: one for unpaid supplier invoices and one for paid supplier invoices.
2. File the invoices in both files alphabetically by supplier name, and then, for each supplier, by invoice date. This means you will always be able to find a supplier invoice quickly.
3. When you pay (or part pay an invoice), write clearly on the face of the invoice the method of payment and date. For example: “12Aug Internet Banking”. This is useful information to have available at a glance.
4. When a supplier invoice has been paid, move it from the unpaid file to the paid file. Two things to note:
   1. If you make a payment by cheque, move the invoice when the cheque payment appears on the bank statement, not before.
   2. If you pay an invoice in instalments, write the details of each payment on the face of the invoice, and only move it to the paid file once it has been fully paid.