 QuickBooks Desktop 2023 Accounts Receivable Aging Report Let's do it within two-inch QuickBooks Desktop 2023 Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. Once again, click the link below for a free month membership to our website and all the content on it. Here we are in QuickBooks Desktop Sample Rock Castle Construction practice file provided by QuickBooks going through the setup process. We do every time maximizing the homepage view drop-down, noting we got the hide icon bar and open windows list checked off, open windows on the left-hand side open. We're going to go to the reports drop-down company and financial. Look at the P and the L, the profit and the loss to the range into the change in from 010124 to 123124. Customize the report, fonts and numbers, change in the font up to 12. Okay, yes please. Okay, one more time on the reports drop-down. This time the other main report, the big balance sheet. We're going to change the dates here this time with the fiscal year on the drop-down to 123124. Customize it with the fonts and the numbers and change it to 12. Okay, yes. Okay, there's the setup process we do every time. Now we're going to be looking at some other reports as opposed to or other than simply the main two financial statement reports. Remember that as we do so, that the main two reports are the financial statement reports of the balance sheet and the income statement. Pretty much every other report that we look at will give more detail about some line item or multiple line items within these two main reports. This time we're looking at the reports that are going to give us more detail about the accounts receivable accounts. So let's give a quick recap of what accounts receivable is, how it is increased and decreased and so on, and what our needs are with relation to it. If we go to the home page over on the left-hand side, the receivables are going to be part of our customer cycle, sale cycle, revenue cycle, whatever you want to call it. Remember that you could have a very easy sale cycle depending on your industry, possibly like gig work, for example, where you wait till something gets paid to you, possibly like a platform pays you like YouTube, you wait till it clears the bank with a deposit, and then possibly use bank feeds to deposit it. If you're in that system, you will not have accounts receivable and you don't have to worry about this particular report, typically. If you then make sales at a cash register, getting paid at the same time you do the work, like in a food truck, for example, then again, you're kind of on a cash-based system. You don't typically have to track the accounts receivable because you're not going to give them their food today. And you know, if Wimpy comes in from Popeye saying, I'll pay you Tuesday, you don't usually work that way. Wimpy, I want my money now or I'm not giving you the hamburger. But if you're in a type of industry like an accounting firm, a law firm, or something like that, then you might have to invoice the client. That's when the accounts receivable is going to become important because we have to track the outstanding receivables and try to be collecting on them. One of the major ways we would do that is to go to the customer center, which you can find here. Or you can go to the dropdown up top into the customer center, which has our list of customers on the left-hand side. And we can do some kind of formatting with these customers, possibly the dropdown here, looking for those with open invoices or those with overdue invoices. So this, in essence, is kind of a list of our accounts receivable with the outstanding balances, allowing us to pick one, see the invoice, follow up on it, call the client, ask where our money is, and so on and so forth. So we can do this similar kind of report here on a report basis. So let's check that out. If I go to the balance sheet, we've got the accounts receivable. If I hit the dropdown here, and we just to note one more time on the accounts receivable, if I double click on it, here's the detail. It goes up with invoices. It goes down with payments when we get paid from the customers. Okay, closing that back out. Other reports that gives us more detail about the receivable, because note that that transaction report isn't the detail that we really want. I don't want to see the transactions by date. I want to see who owes us the money. I want it sorted out by customer, in other words. Reports, dropdown, company and financial, not company and financial, customers and receivables, here are the reports that we have. So we got the AR aging, we got the AR aging detail. We got the customer balance summary, the customer balance detail, open invoices, collection reports, average days to pay, and so on. Let's actually open this in the report center, looking at the report center. We're going to maximize this, because it always, for some reason, un-maximizes it. We're on the standard tab, customers and receivables. Now the main report, typically, that people will use is the aging report. That's because the aging report gives you a little bit more detail than you can find in the customer center, because it gives you how old or outstanding the balances are. We have the AR aging detail also giving you more detail. But the report that gives you a standard like sub ledger is what you might call it from a financial accounting perspective would be the customer accounts receivable by customer report. Let's see. So it's down here under the customer balance reports. So here we have the customer balance summary. That's going to give us a quick kind of look at what people owe us. So if I run that report. Now this report is similar in fashion to what we saw in the customer center. That's why it's not used as much because you can get this detail from the customer center. But it gives you that added benefit of showing you the total at the bottom 9810519. And that should tie up to the balance sheet 9810519. So you have that report there, customer balance report. Let's close it out. And then if I go back into the report center and we got the detail report, if I open that one up, then you've got the same kind of thing. But now it shows you the detail, the detail of being a little bit easier to see when you expand the customers because you could see that it goes up with invoices goes down with the payments. That's the activity that we would expect to have. It's still going to sum up all the customers and you get the total on down below. So useful report. But once again, it doesn't give us a whole lot more detail than most people would be looking for in the customer center. If someone asked us a question like a particular customer about an invoice or our boss or supervisor asked us about who's not paying us or something. We would typically go to the customer center as opposed to the customer report. But those are the two major kind of sub ledger reports. The one that we're going to use that gives us added information is usually going to be this aging report up top. The aging report, let's run it will give us the customer detail again and who owes us the money which we can see like in the total column. But then it breaks us out by how old the outstanding balances are. Let's customize this one spend a little bit more time on it fonts and numbers changing the font on up to 12. Okay, yes and okay. So there we have it. So we've got the customer same kind of thing the current balance or the current balances represent then those invoices that we build that we that are not past do yet. So in other words, if I go to my home page and we go into a create invoice, this is the form that creates an increase to the accounts receivable. I go back to a prior one. Then you can see the date of the invoice and then here's the due date. Let's go to a prior one again and say let's do like this one. Here's the date of the invoice and then the due date, January 14, 2026. It's a little bit skewed because I think this is our sample file and it gets a little messed up when they transfer it from period period. But typically it would be like a 30 days right so we have the invoice we build them for work that we did. They have 30 days to basically pay us would be the common kind of construction. And then after that point in time that they haven't paid us that's when it's overdue. So that means if we have good customers that are current, they would all be in this current area. They're paying us within the 30 days that we gave them. If they're outside of that, then we could say, okay, are they between one and 30 days past due 31 and 60 days, 61 and 90 and over 90. Obviously, this is important added information because it allows us to see quickly, you know, which customers are past due. It allows us to recognize do we want to be doing business with those customers in the future? Or are we not going to sell them anymore until they pay us for the past stuff? It also allows us to make some estimates in terms of collectability because anytime we have an accounts receivable component, we have risk that we're not going to be able to collect on the receivables. That's part of the problem. Many people say, well, I'm never going to do accounts receivable. I just want to get paid now or I'm not doing the work. But clearly some businesses, you have to do the work first and then try to gather clients together that are going, that you could trust, that are going to actually pay you. And so then you can track which ones are not paying you and so on. Notice that as something becomes more past due, then you can try to determine which accounts receivables are likely to be received. And if I go back to the balance sheet and we try to think about the value of that receivable, it would be more fair for us to look at that receivable and say, hey, I'm going to admit that some of those receivables are not going to be collectible. I don't know how much of those receivables might not be collectible, but I can give an estimate based on past history. And this would be what's called the allowance method for bad debt. So if you were to use an allowance method for bad debt, one way you might do that is to break out the accounts receivable by how old they are, how past due they are and assign percentages to those receivables with an aging saying, hey, look, the older something is, the less likely I am to receive it. And I'm going to make it more likely or have a percent that's going to be higher than the older the debt is representing the amount that I don't think I'm going to get paid based on past history. And then you could basically try to make a contra account here called allowance, an allowance account, which will be subtracting out the accounts receivable in an attempt to report accounts receivable fairly, not just for what people owe you, but what you think you'll actually be able to collect on. So that can be an important component for larger companies or those that have more receivables to try to value the allowance. If you don't have an allowance, then what you have is a direct write off method for bad debts. So in that case, if we have older debts, say we have some out here that are 90 days old, we would then be saying, well, are we not going to collect on these? I'm going to give up on collecting them and we'd have to write them off to bad debt at the point in time that we don't think we're going to be receiving them. So we're not going to dive into a whole lot on the allowance method and the direct write off method now, but just note that this report for larger companies is going to be quite useful because larger companies that are tracking their accounts receivable and valuing it all the time are going to have a whole department that are going to try to track this kind of information. So those are the major reports, but let's just take a look at some of these other receivable reports just in review. We've got the aging detail report, so this is going to give you similar information current 1 to 30, but try to give you the detail of the invoices that are outstanding within each of the categories of current and 1 to 30, 31 to 60, and so on and so forth. So you can drill down on those invoices. We've got the graphs. We'll talk more about graphs later. So they're kind of neat, but you can kind of make your own graphs, so we'll talk about how to do that in future presentations. Open invoices is another one that is nice. You would think that the open invoices would basically tie out to the accounts receivable, which it does, I believe 9810519, which ties out to the balance sheet 9810519, and that's because the invoices are the things that increase the accounts receivable. And if they're open, that means they have not yet been paid decrease in the accounts receivable. So you would think that would be another way to get to the balance of the receivables. The reason I don't think this report is as useful is because if you go to the customer center, you can find the you can find the outstanding balances this way as we saw, which is probably quite likely format to do so. Or you can go to the transaction, look at the invoices and sort the invoices by open invoices this way, or past due invoices. And this is probably the first place you would go in practice when trying to do something with those open invoices, like call the client, try to collect on it or send out, you know, a statement or something like that. So open invoices, let's close that back out. Let's see what else we got in the report center. We've got the average days to pay summary, which can be useful if I open up the average days to pay. It's going to give us some ideas, some calculations in terms of how long it takes for people to be paying us. And it's kind of nice that they break this out by customer because now we can look at the different customers and see which customers are paying us earlier, which customers are paying us later. That possibly can give us some information as to whether we want to put incentives in to try to get paid earlier because if we can get paid earlier, typically of course with the receivables. From our perspective, what we would like to do is get paid as soon as possible because that's going to increase our cash flow. And if we can increase the cash flow, possibly we can put that cash to work to buy more property and equipment in order to generate more revenue in the future. Clearly, when you look at the other side of things on the customer side of things, they usually from a cash flow statement or cash flow management standpoint will want to pay you as late as possible holding on to their cash as much as possible. Now, when you think about this, when I used to first learn these concepts, I used to think, well, what's the big deal a couple of days if they hold on to their money till the end of the time frame? Or if they pay it early, it's not a big deal. But note that if you're a small company, it may not be a big deal. If they pay us 15 days later or not, it may not be a big deal because we don't have a whole lot of transactions and the transactions may not be of a huge substantial dollar amount in comparison to another transaction. Obviously, if it was a big dollar amount, that might have more of a big impact. But as companies get larger, it becomes more and more of a big deal because if you deal with like credit card companies or something like that, if you have a bunch of people that are holding on to the money a little bit longer, if you can get them to pay you a little bit sooner, then that can have actually a significant impact. And so that means that larger companies are going to get more and more into this cash management stuff, trying to get paid sooner, possibly giving cash discounts or something like that to incentivize people to pay them sooner. And from a cash management standpoint, when you're paying the bill, you might think, what's the difference if I pay the bill today or 15 days from now? It might not be a big difference for a small company, but if you're talking about a whole bunch of payments, the larger the list of payments, the more significant that could have a significant impact and then could be worthwhile to try to pay as late as possible, right? So this gives you kind of the days break out and it gives you kind of the average for the total, so that's kind of nice. And then we've got average days to pay, average days to pay, another similar report, customer balance reports, we saw the detail unbuilt. This is a job cost report transaction list by customer. So this gives you the transactions broken out that are taking place on a customer by customer basis. And then you've got your lists down below, which are going to be not really financial statement related, but giving you information like phone information and contact information. Now also just note that all the reports that we looked at here, like the aging report, tied out like pretty much exactly the bottom line tied out to the right here, 9810519 to the balance sheet, which is great. But note there's kind of pros and cons in the way QuickBooks does that and why that is the case. And that is because whenever you post something to an accounts receivable account, QuickBooks forces you to add a customer. So even like you can see that when you when you make an invoice, right? If I make an invoice, then you have to enter a customer or you can't do the invoice. That's usually the only thing that increases the receivable. But you can imagine trying to do a journal entry like an adjusting entry to that account. So you might hit the drop down and say I want to I want to have a journal entry. Where's the journal entry. And then you can post something to accounts receivable accounts receivable. It still won't let you post it unless you put a name over here, which can be good, but it can lead to some complications. But on the plus side of that, that means that QuickBooks is kind of forcing you to have your accounts receivable tie out to your sub ledger accounts which are broken out by customer, which is great. They do the same thing for the payable account. So your payable account should should pretty much always tie out to your sub ledger accounts and those reports, which are good. Some other ones that have sub ledgers don't they don't do that quite as stringently. So that's why if you if you look at the inventory asset report, it's possible to post something to an inventory account without adding an item. So you got to be a little bit more careful with some of these other sub ledgers that we'll take a look at in future presentations.