5 Biggest Bookkeeping Mistakes Fixed: Part Four
Not Periodically Cleaning up Accounts Receivable and Accounts Payable
The Accounts Receivable and Accounts Payable Aging Reports in QuickBooks make it easy to track who owes you and what you owe your vendors. They also show you how old the balances are with each customer or vendor. One handy tip is that you can customize these aging reports to show the results in a different format. For example, if your bank requires you to subtract Accounts Receivable that are older than 180 days, you can change the “Days per aging period” from the default of 30 to 60 and now the report shows a column for “181 and over.” The three things to look for on these reports are:
Do these amounts actually look right?
Does anything have a negative balance?
Does anything have a balance of less than $1?
When you look at your Accounts Receivable, you probably have a pretty good idea of who really owes you and about how much they owe you. Spend a few minutes with your Accounts Receivable Aging Report just looking at who it shows owes you and how much, and make sure it matches what your gut tells you. Anything that doesn’t look right is something you should spend a few minutes looking into. Maybe there’s an invoice that didn’t get created but should have been. Maybe a payment was accidentally recorded with a date of next year instead of this year. Maybe your employee is stealing from you and covering it up by adjusting client balances (if they have access to QuickBooks). More than one fraud has been uncovered by a business owner keeping their finger on the pulse of their business with things like this.