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SUMMARY: What
to do when your receivables aging report doesn't
match the A/R total on the Balance Sheet.
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Checking that your Client
Invoice Aging agrees to the A/R Account Balance on your
financials is an essential to maintaining accurate and
balanced books. We recommend you do this at least
monthly. There is a simple way to check this that takes
only a few seconds. Go to Accounting > General Ledger,
then under the Edit menu choose G/L Tools > The
Auditor. Within the Auditor choose the A/R Quick Check,
then click Start. This report will tell you if your
client invoice aging agrees to the balance sheet.
Your client invoice aging report should always equal the
balance of the A/R account on the balance sheet. That is,
the total of your unpaid A/R invoices always equals the
A/R account balance on your financial statements. This is
because A/R is seamlessly integrated with the G/L. When
posting a client invoice it instantly increases the A/R
account balance and the client balance on the aging, as
well, the A/R account balance and the client balance on
the aging is reduced as client payments are posted.
There are only two things that should affect the A/R
account and client invoice aging. These two items are
accounts receivable invoices and client payments applied
to those invoices. The only exception is beginning
balance entries - discussed later. So in theory, matching
the client invoice aging to the general ledger A/R
balance is very simple because both should increase and
decrease simultaneously as A/R invoices and client
payments are posted or unposted.
However, there are several ways in which the balances
between the client invoice aging and the balance sheet
can differ. These ways fall into two categories, user
errors and system errors. User errors are centered around
unintentionally affecting the client invoice aging or
your A/R account balance without affecting the other. A
simple example would be making a journal entry to the A/R
account. This would change the balance of the A/R
account, but have no affect on the aging, causing them to
go out of agreement. System errors are centered around
posting errors that a user normally can't control. For
example, you batch post a series of invoices but the A/R
account is not properly updated in the G/L. There are
techniques to discover and fix both kinds of errors to
bring your client invoice aging and A/R account balance
back into agreement.
This technical note discusses the possible scenarios that
explain why the totals don't match and how to fix them,
broken out by user errors and system errors, then
followed by some important concepts to understand:
USER ERRORS
Beginning balances were not entered correctly when your
database was started.
When you first started your Clients & Profits
database, you should have entered two things at the same
time: your A/R beginning balance and any unpaid client
invoices. The total of the unpaid client invoices should
have exactly equaled the A/R beginning balance in the
G/L. If not, then your balances were off from the
beginning.
It's a very good idea when entering your beginning
balance invoices and beginning balance journal entry to
print a balance sheet, then print the client invoice
aging, to make sure they agree. Or, just print the A/R
Quick Check, as mentioned above, which does the same
thing, just much more quickly. If you didn't do this,
then there is a way to do this at a later time. Print the
Trial Balance for the period you started C&P. Because
you should have entered your beginning balance journal
entry into the period before this (i.e. if you started in
period 4 it should have been entered into period 3), the
beginning balance for the Trial Balance for your first
period using C&P should represent the beginning
balance journal entry to the A/R account. To find the
beginning balance invoices, go into the Auditor and print
the A/R Exception Report. At the bottom of this report
are the invoices that represent your beginning balance
invoices (where you debited/credited the A/R account).
The total of these should equal the beginning balance on
the trial balance for the first period using C&P.
In Clients & Profits 4.4 and Clients & Profits
PLUS, the "jump start" utility must be used correctly.
(An invoice added through jump start does not affect the
general ledger. It is necessary to do a journal entry IN
THE SAME AMOUNT as the invoices added through jump start.
Also see the manual section on jump start.
Clients & Profits Pro and Clients & Profits
Classic do not have a jump start utility. Instead, unpaid
beginning balance invoices are added by posting both the
debit and credit to the Accounts Receivable account,
which nets to zero in the G/L. This is necessary to
prevent double counting, because you already established
your beginning A/R account balance via your beginning
balance journal entry. As well, if you don't use the
accounts receivable account as the debit and credit
accounts, when you enter a client payment against these
invoices it will credit the wrong account (should credit
A/R), and this will cause the invoice balance to be
reduced without reducing the A/R account balance in the
G/L. This will cause the two to go out of agreement.
If your aging has never matched your Balance Sheet, then
your problem is probably caused by errors in your
beginning balances. Tip: Ask yourself which one was
correct: the unpaid client invoices, or the A/R total.
Then you'll need to add in the proper entries--either an
adjustment to the G/L or adding/deleting entries from
Accounts Receivable--to make the balances equal.
(You may need to consult with your accountant for
guidance on what adjusting entries to make to balance the
account.)
The Client Aging and Balance Sheet are printed at
different times.
Both the Client Aging reports and the Balance Sheet
are up-to-the-minute accurate. This means they're always
showing the current balance as of the time they're
printed. So if you print an aging report on Monday, then
print the Balance Sheet on Tuesday, the data on the
reports may be out of sync--the aging report won't show
invoices posted on Tuesday.
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Tip:
Notice the run date and time of the aging and
balance sheet you are trying to balance. Is it
possible that transactions were posted between
printing the two reports? To make sure, reprint
both reports at the same time--then compare the
totals.
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Again, a way to avoid this issue is to just print the
A/R Quick Check, since by default it runs both at the
same time and prints it on one report for you.
As well, make sure you are NOT printing a prior period
aging. When reconciling your client invoice aging to your
financials, first reconcile the client invoice aging
through TODAY with your financials. Reconciling prior
periods is a much more difficult task and should always
begin anyway by first reconciling your aging through
TODAY to your financials.
There are entries in a month or period beyond the balance
sheet.
The client aging report shows all unpaid invoices,
regardless of date or accounting period. But the balance
sheet reflects only G/L activity to the A/R account
through the end of the accounting period for which you
are printing it. In theory, you could have G/L activity
to the A/R account in a period after which you are
printing it (even if the period for which you are
printing it is your latest period). C&P permits users
to post activity into future accounting periods, which
can be done accidentally, especially if future accounting
periods are not locked in Preferences.
Tip: To check for this, print a balance sheet for period
15 in Classic or period 24 in Pro--it will include all
G/L activity to the A/R account. If it is different from
this month's balance sheet, there are General Ledger
entries posted after the period you've been looking at.
Find these entries and move them appropriately to the
correct period in the General Ledger.
Again, a way to avoid this issue is to just print the
A/R Quick Check, since it includes by default all open
A/R invoices (regardless of their period or date) and the
A/R account balance through the latest period in your
version of C&P (picking up any entries in future
periods).
The age clients first option was not selected when
printing the Client Aging, or the invoices weren't
aged.
The aging process calculates up-to-date balances based
on payments made to date by clients. Any invoice that's
paid is removed from the aging report, and unpaid
invoices are aged based on today's date--so you'll know
how long they've been open. The age client first option
performs these calculations before the aging report is
printed. It ensures that your aging report shows only
open invoices.
Aging clients first is built into C&P 3.x and
later, so this isn't a problem in these versions, since
all client balances are updated and all invoices are aged
by default. However, it is a good idea to print your
client invoice aging prior to printing the A/R Quick
Check, to ensure it uses the correct client totals.
A journal entry was made directly to the A/R
account.
Client balances and invoice balances increase when A/R
invoices are posted, then decrease when client payments
are posted (and vice versa when unposted). The A/R
account in the General Ledger is updated in the same way.
When you add a journal entry directly to the A/R account,
you're not affecting the client balance or the invoice
balance itself--which makes your balance sheet and
invoice aging not agree. (For instance, if a journal
entry is made to debit A/R for $100.00, the general
ledger will be $100.00 higher than the client aging
report.) For this reason, don't make journal entries
directly to your A/R control account. If you need to
adjust the A/R balance, make an entry into Accounts
Receivable or Client Payments.
You can utilize an Auditor utility called the A/R
Exception Report to find these. One of the areas of this
report prints any journal entries that used the A/R
account.
An A/R invoice was entered with an incorrect G/L
account.
A client invoice should debit the Accounts Receivable
account and (usually) credit an income account. This will
increase the A/R balance in the General Ledger and add
the invoice to your aging report, keeping the two in
balance. But if you add an A/R invoice that debits any
account other than A/R, the wrong account balance will
increase when it is posted. The A/R total on your balance
sheet will be less than the aging total as a result of
this transaction.
You can utilize an Auditor utility called the A/R
Exception Report to find these. One area of this report
prints any invoices where the A/R account was not
debited. As well, another area prints any invoices where
the A/R account was credited (since this should never
happen apart from your beginning balance invoices). It
does break out your beginning balance invoices (that have
a debit and credit to the A/R account) in their own
section, so you don't confuse these as invoices that
improperly used the A/R account. Do make sure all the
invoices in the beginning balance invoice section has a
date that reflects the time you started C&P. If one
has a later date, it could be a problem invoice.
A Client Payment was entered with an incorrect G/L
account.
The same problem can occur with client payments, too. A
client payment will credit the same account that was
entered as the dGL on the invoice it is paying.
Therefore, if the A/R account was not used as the dGL on
an invoice it will cause the wrong account to be credited
on the payment. The invoice will be paid, so it won't
appear on the client aging, but the A/R account balance
won't be reduced by the payment amount in the G/L. This
will cause the client aging and your financials not to
agree.
You can utilize an Auditor utility called the A/R
Exception Report to find these. One area of this report
prints any payments that did not credit the A/R account.
As well, another area prints any payments that debited
the A/R account (since you should never debit this
account on a payment).
A bank deposit was added, but the Accounts Receivable
account was used by mistake.
A "bank deposit" in Clients & Profits programs does
not affect client invoices, only the General Ledger. So
if the A/R account is entered by mistake, its balance on
the Balance Sheet will be improperly affected. Bank
deposits should only debit cash and credit a
miscellaneous account, such as interest income--but not
the A/R account.
An adjustment/discount was taken with a Client
Payment, but the Accounts Receivable account was used as
the adjustment G/L account.
This situation applies only in Clients & Profits Pro
and Clients & Profits Classic. They have the ability
to track adjustments and discounts on client payments,
without making complicated adjusting entries. An
adjustment will reduce the balance of an invoice on the
client aging report. The system will automatically credit
accounts receivable in the amount of the adjustment. You
should enter the account to debit in the Distribute
Payments window (usually a discounts given - expense -
account).
If the A/R account is entered as the adjustment account
in the Distribute Payments window, Clients & Profits
will debit AND credit A/R in the amount of the
adjustment. The invoice balance will be reduced on the
aging report, but the A/R balance in the General Ledger
won't be reduced by the same amount as the total payment
amount--causing your reports to be out of agreement.
The accounts receivable account was used when entering
an accounts payable invoice or check.
The A/R account is appropriately used in Accounts
Receivable and Client Payments only, and never used in
Accounts Payable or Checkbook. A/P invoices and checks
won't affect client invoices, so they won't update the
client aging, but they will affect the G/L, causing your
reports to go out of agreement.
Client payments were purged then a verify/recover was
run on the client aging.
If client payments are deleted from the database
using the purge utility, it is important to make sure
that the corresponding accounts receivable invoices are
purged at the same time. You will know this happened
because invoices with old dates that you know have been
paid will show up on the aging. When you find these
invoices, then choose View Payments under the File menu,
no payments will be found.
If purging is not done correctly and a verify/recover is
run on the client aging, these old invoices will
re-appear as open. This is because the verify/recover
could not find any client payment to match to these
invoices. Therefore, to the system these invoices have a
balance due, that the verify/recover restores.
The solution is to enter new payments to clear these old
invoices from the aging without affecting the g/l. Enter
a payment against the invoice(s), one client at a time,
debiting and crediting suspense. (This nets to zero in
the g/l). Do not do this with actual unpaid invoices. You
won't be able to purge these old A/R invoices once a
balance has been restored, after running the
verify/recover, because the purge function has an
internal control feature to prevent the deletion of any
A/R invoice with a balance due.
SYSTEM ERRORS
The Accounts Receivable account on the Balance Sheet
does not match the Audit Trail.
G/L accounts are updated only during posting. If
something goes wrong during posting, it's possible to
post an invoice or payment that shows up in the G/L
without updating the account balance. It isn't at all
typical, but it can happen due to a network error. If so,
an account total on the balance sheet will not equal the
debit and credit journal entries in your General Ledger
for this account.
You'll know this problem has occurred after
printing the Account Totals Checker in the Auditor. It
will tell you if you need to perform a verify/recover on
the A/R account (which updates the account balance to
match the G/L detail for that account). It
provides instructions on how to perform a
verify/recover.
There is an out of balance journal entry in the
general ledger and the missing debit or credit is to the
A/R account.
If the posting of accounts receivable or client payments
is interrupted for any reason, your general ledger could
be inaccurate. This problem can be located by printing
the journals for a particular month or period. Clients
& Profits Pro/Classic users can also find this by
using the Out of Balance Checker report in the Auditor.
The solution is an adjusting journal entry to restore the
missing debit or credit. You can utilize the Verify
feature on a particular reference number in the G/L by
clicking the green checkmark toolbar button. It will make
the necessary adjusting journal entries for you to fix
this reference number, then you only need to post them,
after checking their accuracy. You fix an out of balance
one reference number at a time per the Out of Balance
Checker report.
You can call Clients & Profits for more detailed
information on fixing an out of balance if you like. It
is important to handle the situation properly. In some
cases the balance sheet can be out of balance, but a
journal entry is NOT the correct solution. It could make
matters worse without your realizing it.
A client invoice should have a balance due or a
different balance, causing it to print with the wrong
balance, if at all, on the client invoice aging.
An invoice's balance due is calculated as it is posted.
It is the difference between the total of the invoice and
it's payments. At any time you can find an invoice and
click on Payments, then subtract these from the total to
arrive at the balance. If the balance does not reflect
this, then a verify/recover of A/R Account Balances is
necessary. Go to Setup > Utilities >
Verify/Recover, then choose A/R Account Balances. There
isn't a utility or report to tell you that you need to
perform a verify/recover, other than checking one invoice
at a time. Rather, you can print your client invoice
aging, then perform a verify/recover on all A/R account
balances (for all clients), then print the client invoice
aging again and see if the totals change. If they do,
then you should be able to identify the invoice balances
that changed by comparing the two client invoice
agings
Note: Be aware, if you have purged client payments at
some time in the past, make sure you also purged their
respective A/R invoices. If you didn't, a verify/recover
of all clients A/R account balances will restore MANY old
invoices to your aging. Don't perform the verify/recover
in this case, except one client at a time to prevent this
from happening. Or, purge the A/R invoices as well, then
you can verify/recover all client A/R account
balances.
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Tip:
In Clients & Profits Pro and Clients &
Profits Classic, the verify/recover A/R balances
has the option to verify one selected client--or
all clients. Verifying one client is much
faster, if you know the client number that has
the problem.
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4/PLUS users only: This utility is called
verify/recover vendor, client agings. Note that it
affects both the vendor and client aging reports. Do not
verify accounts receivable; this will not correct your
aging.
Posting A/R or Client Payments does not update the
G/L
On rare occasion, posting or unposting invoices or payments will not
save BOTH the debits and credits to the G/L. This is the most difficult
system error to find when it happens. This is because it will not
show up on the Out of Balance Checker, the Account Totals Checker,
or the A/R Exception Report. The only indication that this may have
happened is your client invoice aging and the A/R account balance
no longer agree. If you have exhausted all other resources on this
tech note to find and fix the problem that caused your client invoice
aging and A/R account to go out of agreement, then finding non-postings
is worth looking into. Keep in mind this applies to both posting A/R
Invoices AND Client Payments.
Many software programs force you to print a
pre-posting report (proof list) and a posting report to
make sure they agree. C&P does not force you to do
this, but you can if you like. Print the proof list, then
after batch posting all entries, go to Accounting >
General Ledger and print the respective journal for that
this day and make sure they agree. To print the
respective journal click the printer toolbar button to
Print G/L Reports. Choose Journals, then choose the
appropriate journal. For the date range choose Date
Posted and enter the from and to date as the same day as
you did the batch posting. Compare this to the proof list
and they should exactly agree. If they don't, then a
posting error occurred.
If you did not do this, then you will need to try to find
the non-posting by comparing certain A/R and Client
Payment reports to the G/L Audit Trail for the A/R
account. The following procedure is highly successful in
finding the cause of the disagreement between your aging
and the G/L, and often is the last step you will need to
take to find the cause. In theory, your sub-ledgers (A/R
Invoices & Client Payments) should always agree to
the A/R account in the G/L (since these are the only two
areas that should affect your A/R account). With this
truth in mind, you can print reports from both A/R &
Client Payments and from the G/L for a certain date range
and they should exactly agree. If they don't then you
have just isolated the time frame in which the problem
occurred. Then begin reducing the date range of these
reports and you can isolate a very small date range that
is the cause of the problem. Last, look at invoice by
invoice and payment by payment detail in the G/L to find
the problem (doing this before limiting the date range
can take hours, if not days, so limit the date range
first).
The reports you want to compare that should exactly
agree are these: From Accounts Receivable choose to print
A/R Reports > A/R List by Date for a particular Date
Posted date range. Write down the total from this report.
Next go to Client Payments and choose to print Client
Payment Reports > Misc. > Client Payment Summary
for the same Date Posted date range. Write down the total
amount for those client payments that credited the A/R
account (not the total of the entire report for this
would erroneously include credits to other account, such
as those credits that come from Bank Deposits or Retainer
Client Payments). Net the two totals together from the
A/R and Client Payment reports and this should be the net
impact on your A/R account in the G/L for this Date
Posted date range. Now, go to the General Ledger and
choose to print G/L Reports > Audit Trail. Enter the
same Date Posted date range for All Periods. As well,
make the from and to accounts the A/R account (so that
only this account shows up on the report). Do not
sub-total the Audit Trail (leave this box unchecked). The
balance of this report should exactly match the net total
of the A/R and Client Payment reports. If they don't then
you know there was a problem within this Date Posted date
range. Attempt to reduce the problem date range even
further by doing the same thing with shorter Date Posted
date ranges. Once the date range is small enough,
research the detail invoice by invoice and payment by
payment to find the problem transactions.
Now you need to find the exact transactions that
caused the problem. To find them you first need to
understand that when A/R invoices post to the general
ledger they will always have an AR# prefix with the
invoice number following it. The same is true for client
payments, except they have a PMT# prefix with the check
number following it. Make sure each and every invoice and
payment on your A/R and Client Payment reports has a
matching reference number in the Audit Trail. If one or
more is missing, you will need to add it manually via a
journal entry to the G/L. Make sure you use the reference
number C&P would have used if the posting was
successful. You may find AR# or PMT# reference numbers in
the Audit Trail that are NOT in the A/R or Client Payment
reports. This can happen if an invoice or payment was
unposted and then deleted. C&P keeps the G/L detail
so a proper audit trail is maintained. Just make sure
these reference numbers net to zero for the A/R
account.
You can see why users often print reports before and
after posting to make sure the G/L was updated properly,
and check the G/L after unposting to make sure it was
properly updated as well. It doesn't take much time to do
this, but can save you a lot of time in finding a problem
later down the road.
Note on System Errors: Please call Clients &
Profits if you find system errors occur on a regular
basis. They are always caused by network or database
problems. Nothing in C&P tells it to mispost, rather
the network drops the command C&P sent to the server
or the database is damaged keeping the G/L file from
being updated properly. We at C&P may be able to help
you troubleshoot your network and give you some steps to
try to help minimize or end the problem.
IMPORTANT CONCEPTS
Should I "plug" the A/R account to make it
balance to the aging?
We at Clients & Profits will never tell you to plug
your A/R account. By this we mean to add a journal entry
without using the methods described in this tech note to
force the A/R account to agree to the total of your
client invoice aging. Rather, we will recommend finding
the source of the problem using the methods outlined in
this tech note and have you fix it accordingly. However,
if you and your accountant have exhausted these methods,
or don't want to spend the time to look into it further,
and the difference between your financials and aging are
immaterial, you can choose on your own to plug the
account. Normally this is done if you know the aging is
correct and the difference is immaterial. You then make a
balanced journal entry that debits or credits the A/R
account, with an offset to an account you and your
accountant decide on. Often it's retained earnings or a
misc. income/expense account. Again, C&P will never
recommend this, this is a choice you will need to make on
your own.
The total of your client aging report will always equal
all of the A/R invoices less all of the client
payments.
How an invoice appears or doesn't appear on the aging
report is simple: It appears if it has a balance due. The
invoice's balance due is simply the total billings (plus
sales tax if applicable) less any posted payments. The
verify/recover client agings utility is equally simple:
it matches up an invoice with all of its payments. This
includes every A/R invoice and every client payment
posted since you started your database.
The Accounts Receivable and Client Payments files keep a
complete history of every invoice and client check for
reference. Only a purge will decrease this history.
Closing the year does not delete any client payments or
A/R invoices--it only deletes G/L journal entries. So
entering an A/R invoice or client payment is the only way
to affect your client aging report.
The General Ledger includes the total of everything
entered to the A/R account, from any source, whether
correct or not.
The A/R asset account in the General Ledger is updated by
entering an A/R invoice, client payment, --or adjusting
journal entries. (An entry from a/p or checkbook could
also be posted to the a/r asset account in error). To use
Clients & Profits (or other accounting software, for
that matter) correctly, the A/R asset account should be
used in these cases:
1 To account for a beginning balance when you
first start your database.
2 As the debit account on client invoices.
3 As the credit account on client payments.
Using the A/R asset account at any other time will throw
your client aging and balance sheet out of balance.
Therefore, if you print an audit trail of your A/R
account, you should only see the beginning balance entry
and reference numbers beginning with AR# and PMT#. If you
see others beginning with AP#, CK# or JE#, this normally
is a problem.
The G/L detail is rolled into the A/R account's
beginning balance when the year is closed.
If your problem is in your A/R beginning balance, and
you have already closed the year, then you will need to
restore the prior year's database backup, prior to
closing, to analyze the G/L detail behind the beginning
balance, since it no longer exists in a closed database.
This is important to know when looking at the reports
that cross fiscal years, as described below:
Useful Auditing Reports for Troubleshooting Aging
Problems
All versions of Clients & Profits provide ample,
detailed accounting reports to help audit your work and
troubleshoot any problems. Instructions for printing
these reports are found in your User Guide.
Audit Trials
The audit trail lists journal entries by G/L account.
They are printed from the General Ledger window. Journal
entries are selected by date and/or accounting period.
You can print activity for one account, all accounts, or
a range of accounts. The audit trail report sub-totals
entries by account number.
GL Journals
The G/L journals list journal entries by transaction.
They are printed from the General Ledger window. You'll
see each transaction's debits and credits, listed by the
order in which they were posted. Transactions are
identified by reference number. The reference number's
prefix (i.e., AR#, AP#, PMT#, and CK#) identifies the
transaction's source--that is, from where it was posted.
Manually posted journal entries have a user-defined
reference number. If a transaction is somehow out of
balance, you'll see it clearly identified.
Detailed General Ledger
The Detailed General Ledger report shows the period's
journal entries for each account number. For each account
you'll see its beginning and ending balances, plus each
debit and credit journal entry. The Detailed G/L report
is printed from Financials for one selected period at a
time.
Trial Balance
The trial balance shows the beginning, current, and
ending balance for each G/L account. It shows all
accounts, including balance sheet and income statement
accounts. This report is printed for one month (or
period) at a time. It will show each account's beginning
balance (carried forward from the previous month), the
total of all the month's journal entries affecting each
account, and the account's ending balance (which matches
the balance on the Balance Sheet).
- This report corresponds exactly to the Detailed
G/L. However, the current activity column shows only a
summary number, as opposed to listing each journal
entry.
Year to Date Trial Balance
The YTD trial balance shows the period balances for
all accounts for the entire year. This report shows the
beginning balance of each account at the beginning of the
year, a summary figure for each month or period, and the
year to date balance. It is like an "expanded" trial
balance.
Accounts Receivable Reports
Accounts Receivable reports show client invoices and
line items for any time period. The A/R List shows
invoices only, by debit account or client number, and
doesn't show billing detail. The A/R Journal shows
invoices in detail, complete with each line item's job,
task, and credit G/L account number. Invoices are grouped
by invoice number. The A/R Summary shows billing line
items by credit G/L account.
Client Payment Reports
Cash Receipts reports show client payments and line
items for any time period. The Payment List shows
payments only, by debit account or client number, and
doesn't show payment detail (i.e., which invoices were
paid). The Payments Journal shows payments in detail,
complete with each line item's invoice number, discount,
and credit G/L account number. Payments are grouped by
the client's check number. The Payment Summary shows
payment line items by credit G/L account.
TROUBLESHOOTING
Below are some general guidelines to follow that will
help your client agings stay in balance with your General
Ledger.
It is always a good idea to compare the Vendor and Client
Account Aging balances with the Balance Sheet at the end
of each month. They should match. Mistakes are easier to
find if you can narrow down when they occurred. The
fastest way to do this is to print the A/R Quick Check in
the Auditor.
If you discover that the two reports don't agree, you'll
want to first verify the accuracy of the current aging
reports.
1 Are all unpaid invoices appearing on the
list?
2 Are there any invoices on the list that
shouldn't be?
3 After preforming a verify/recover on ALL A/R
account balances did my agings change?
Once you've made any necessary adjustments , you're ready
to audit the General Ledger.
1 Start with The Auditor reports. These are the
easiest and fastest reports to print and usually find the
problem
2 Print the A/R Exception report to look for user
errors with the A/R account
3 Print the Out of Balance and Account Totals
Checkers to look for posting system errors
4 If the problem is still not found, utilize
the other methods in this tech note
ADDITIONAL TROUBLESHOOTING TECHNIQUES
Sometimes it is helpful to use your prior period agings
to find the period your aging first went out of balance
with your financials. As mentioned before, it's always
good to first reconcile your aging through today to your
financials. The prior period aging can sometimes aid in
this by helping you isolate the time frame to research.
For example, if you haven't reconciled your agings to
your financials for 6 months (after reading this tech
note you will never do that again!) and you find they are
out of agreement, then you can print a prior period aging
for each of the last six months and compare it to the A/R
account balance from the balance sheet or trial balance
for each of those months to see when the A/R account went
out of agreement with the client invoice aging.
Another technique that can help you identify the
problem clients, can be done if you printed to hard copy
an aging through today that you know agreed to your
financials at a certain time in the past (a prior period
aging that also agrees will work as well). Then you can
print an Audit Trail subtotaled by client for all periods
from the exact date you printed this historical aging
through today for the A/R account alone. This will show
you all activity to the A/R account subtotaled by client.
You can them compare your historical aging to the current
aging and note the difference for each client. By
comparing the difference on the audit trail to the
difference on the agings, you often can identify the
problem clients. Those clients where the net change on
the audit trail differ from the net change on the agings
are a problem. Then focus your attention on a detailed
analysis of those clients. Keep in mind you potentially
could have entries to the A/R account that lack a client
code. To find these print an audit trail with the same
parameters, except don't subtotal by client. Make sure
the two audit trails agree in total, if they don't, this
means you have some entries to the A/R account that lack
a client code (which should never be the case except for
the beginning balance journal entry). To see the client
on an a debit or credit to the the A/R account, just
double click on a line item in the General Ledger that
references the A/R account.
On rare occasions you may be able to find the problem
if it's one invoice or payment that caused the problem by
performing a search by amount in the G/L. Go to the G/L
and click the find button and then choose to find by
Amount. Enter the amount in question and maybe you will
find the problem transaction!
Analyze your Suspense G/L account. Make sure the
Suspense account has a zero balance. If it does not,
print an Audit Trail for this account and fix the
reference numbers causing the balance. If any of them are
from A/R or Client Payments, this will help bring your
agings and G/L into agreement.
Last, keep in mind if you use more than one A/R
account you will need to balance the aging to the G/L one
account at a time. To print the aging for one account go
to Snapshots > Client Account Aging and click the box
to Sub-total invoices for one A/R dGL and enter one of
your A/R accounts. Repeat for the other A/R accounts. If
your agings in total agree to all the A/R account totals
in the G/L, but the individual agings don't agree to each
A/R account, then most likely when you paid one of the
invoices for a given A/R account you credited the other
A/R account.
TIPS FOR KEEPING A/R IN BALANCE
Once your aging reports and balance sheet are correct,
you'll want to take extra steps to make sure that they
stay balanced. Some suggestions:
- Compare the reports frequently. If you can narrow
down the period when the error occurred, it will save
time finding the problem.
- Print an audit trail for the Suspense account.
Transactions get posted to the Suspense account when
Clients & Profits doesn't recognize the general
ledger account number.
- Save your latest matching aging and balance
sheets. Save all A/R and client payments proof lists
since the last time you balanced. This way you will
always have a clear record of what transactions have
affected your aging since you last balanced.
- Check your proof lists carefully before you post.
Make sure that each entry debits and credits the
proper G/L account. Print the respective journal in
the G/L after posting to make sure everything posted
correctly.
- Do not make journal entries directly to the A/R
control account. If for some reason you have
receivables that are NOT entered through the A/R
sub-ledger, establish a separate A/R control account.
Such an account may be called "Accounts Receivable -
Other."
- If you happen to have multiple A/R accounts for
your client invoices, balance one account at a time to
your fianancials.
