How to Find Your Accounts Receivable Information

Accounts receivable (AR) refers to the money owed to a business for goods or services that have been delivered but not yet paid for. These outstanding amounts are typically in the form of unpaid invoices. Accounts receivable is considered a current asset on a company’s balance sheet, representing money expected to be received within a short period, generally less than a year. Managing accounts receivable is important for a business’s financial health, as it directly influences cash flow and liquidity. Effectively tracking and collecting these amounts ensures a business can meet its financial obligations and invest in growth.

Sources of Accounts Receivable Information

Accounts receivable information is stored in various locations depending on a business’s size and technological sophistication. Modern businesses primarily rely on accounting software to manage their AR data. Programs like QuickBooks, Xero, SAP, or Oracle feature modules where AR data is entered and stored. This software centralizes information, making it easier to track outstanding invoices and customer balances.

For smaller businesses or those that do not use comprehensive accounting software, accounts receivable may be tracked through manual ledgers or digital spreadsheets. These methods require diligent and consistent record-keeping to ensure accuracy. While less automated, manual systems can still provide a clear overview of who owes the business money if maintained meticulously.

Original sales invoices serve as a foundational document for each accounts receivable entry. They contain transaction details: goods/services, amount billed, and payment terms. Contracts or agreements accompanying sales can also specify payment terms and conditions, providing additional documentation for accounts receivable.

Bank statements also play a role in managing accounts receivable by confirming payments that have been received. By cross-referencing bank deposits with outstanding invoices, businesses can verify which accounts receivable items have been cleared. This helps ensure that payments are correctly applied and that the accounts receivable records are accurate.

Key Details within Accounts Receivable Records

Regardless of the storage method, an accounts receivable record contains specific pieces of information essential for tracking and managing payments. Each record includes customer information like name, contact details, and unique identification numbers, ensuring proper debtor identification.

Invoice details include a unique invoice number, issue date, and a description of goods or services. These details link the receivable to a specific transaction. The original amount due, the total billed to the customer, forms the core financial component.

Payment terms, such as “Net 30” or “Net 60,” are clearly stated within the record, indicating the agreed-upon period within which payment is expected. The amount outstanding, or balance due, reflects the remaining amount the customer still owes after any partial payments or credits. A payment history may also be included, showing partial payments or credits applied, providing a complete transaction overview.

Generating Accounts Receivable Reports

Compiling and viewing accounts receivable information often involves generating specific reports, with the Accounts Receivable Aging Report being a primary tool. Accounting software simplifies this process, allowing users to navigate to a dedicated reports section where AR aging reports can be automatically generated based on the entered data. These reports provide a structured overview of outstanding balances.

For businesses that manage their accounts receivable manually, creating an aging report typically involves using a spreadsheet program. This manual process requires listing each outstanding invoice, calculating its age from the due date, and then categorizing it. Formulas can be used to automate the calculation of days past due and assign invoices to aging categories.

An AR aging report categorizes all outstanding invoices based on how long they have been overdue. Common categories, often referred to as “aging buckets,” include current (not yet due), 1-30 days past due, 31-60 days past due, 61-90 days past due, and 90+ days past due. This categorization helps businesses identify slow-paying customers and assess the likelihood of collecting the debt, which can inform collection efforts and potential bad debt provisions.

Reconciling Accounts Receivable Balances

Verifying the accuracy of the accounts receivable balance is a regular process known as reconciliation. A key step involves comparing the total AR balance from detailed reports or a subsidiary ledger with the Accounts Receivable account in the General Ledger. These two balances should ideally match, confirming that the summary amount in the general ledger is supported by the individual customer balances.

Another part of reconciliation is matching invoices to payments received. This involves cross-referencing outstanding invoices with bank statements and payment records to confirm correct application. Ensuring paid invoices are not outstanding maintains accurate records and prevents customer miscommunication. Many accounting systems allow for this matching, either manually or through automated features.

Promptly investigate discrepancies during reconciliation. Common reasons for mismatches include unapplied payments, data entry errors, or incorrect posting of credits. Resolving these issues, such such as correcting typos or reallocating payments, is necessary to ensure financial records are accurate and reliable for reporting and decision-making. Regular, often monthly, reconciliation identifies and corrects problems early.