DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Accounts Receivable CREDIT Balances not shown in Aged Receivables Listing


#1

The Aged Receivables Listing DOES NOT show Customers that have CREDIT Balances. This means that the Aged Receivables Listing will not reconcile with the AR control account in the Balance Sheet.


Aged Receivable Report Format
#2

By definition, a credit balance cannot be aged, because it is not receivable.


#3

True, but the Receivables Report should nonetheless reconcile with the AR account in the Balance Sheet. If the Aged Receivables Report isn’t “that” report, is there another report that does reconcile with the AR account in the Balance Sheet?


#4

That maybe so by definition, but traditionally they are included in the listing as firstly it makes the report complete but secondly and more importantly it provides a reconciliation document between the Balance Sheet Accounts Receivable account balance and the matching makeup of the individual customer balances.

With the credit balances missing, this report fails this significant auditing requirement.


#5

In my experience, aging reports are management tools, not auditing tools. They let a business determine which customers are overdue by how much and are helpful in determining days receivable, etc. Likewise, they summarize one’s own position with suppliers, possibly helping determine which payments to make first.

If customer/supplier credits were still shown separately, aging reports would match receivables/payables. With the way Manager currently integrates customer/supplier credits with Accounts receivable/payable, any auditing requirement can be satisfied with a drill-down report from the Summary on those accounts.

I can understand why someone might like the aging reports to be identical with Accounts receivable/payable balances. And I can understand a desire for customer/supplier credits to be shown separately. (That is my personal preference.) But I can’t think of anything an auditor would require that Manager cannot produce easily.


#6

Why not the two birds with the one stone, which every other accounting package does.

In my auditing experience the accounting system should generate its own internal validation reports.
An external spreadsheet report complicates the audit process by, 1) requires additional auditing as you have to establish / prove that the spreadsheet actually represents the actual data of the accounting system, and 2) doesn’t contain the aging of those balances without reference to a secondary “incomplete” report.

Perhaps easily but not professionally - adding credit balances to the Manager aged reports would create a higher standard of reporting presentation, rather then a reproduction spreadsheet standard.


#7

Fully agree. A credit note is a correction of sales invoice. In Accounts Receivable the sales invoices, credit notes and their respective payments “come together” at a certain point of time. Aged Receivables should always reflect all the details of Accounts Receivable, but from a date perspective. So including outstanding credit notes even when there is a credit balance. Difference in both totals assumes an error in the details.
Moreover outstanding credit notes are often created by the fact that the client paid all of his outstanding invoices, but for some reason forgot to deduct the credit note. Very professional to inform the client of his abuse.


#8

I am still concerned about this Report. It really should reconcile to the balance of AR in the Balance Sheet. A similar situation would exist with the Aged Payables report; that should reconcile with the AP balance in the Balance Sheet. So, any CREDIT balances in AR or DEBIT balances in AP should be included in their respective Aged Reports. I have been a Consultant CPA for over thirty years and have yet to find an automated accounting system that does NOT have their Aged Reports reconcile with the relevant account in the Balance Sheet. I acknowledge the fact that for “audit trail purposes”, other listings CAN be exported to (say) Excel and analysed … but why go “outside the system” when it would be so easy to include ALL balances in the Aged Reports? Can this request be included for consideration in the next update of Manager?


#9

With your new release, it now appears that the Aged AR Report DOES include CREDIT balances. Is this correct? Previously it was stated that this feature was not really useful … why the change of heart? Also, is there consistency between AR and AP … in other words, will DEBIT balances now also appear in the Aged AP Report?


#10

If true, then the power of valid argument has risen to the front - don’t question the why.


#11

I don’t see this happening as of v17.9.38. Here is the Customers listing for a test company:

58 PM

This matches the Summary’s Accounts receivable:

06 PM

But the Aged Receivables report only shows the customer who owes money:

@ozcpa, can you provide an illustration where a customer credit balance shows on the Aged Receivables report?


#12


#13

Aged AR Report and Customer Summary agree.


#14

The why is important because if demonstrates the development methodology of the designer. The logic that I used to get this “feature” implemented was perfectly sound logic (based on my extensive experience as a Consultant CPA), yet I was informed that the “feature” wasn’t necessary. As it now appears to have been implemented, I was curious as to what had changed in the minds of the developers.


#15

@ozcpa, the difference between what you showed and what I showed is that your credit balance appears to have been created with a sales invoice on which you entered a negative amount. Is that true? Mine was created through the receipt of money posted to the customer’s Accounts receivable subaccount, simulating a deposit.

If you created your credit balance as I’ve suggested, that obviously produces the result you desire, but doesn’t seem like a realistic scenario. When are you ever going to issue a negative-balance sales invoice? A credit balance for a customer would be created via a credit note or receipt of money (as in a deposit).

This reveals the probable underlying structure of the Aged Receivables report: grouping by due date of unpaid sales invoices, not an analysis of the customer’s Accounts receivable subsidiary ledger. That makes sense, because the report hasn’t changed since earlier times when credit balances were shown in a Customer credits liability account. Under that scheme, the Aged Receivables report did match the Accounts receivable balance, something I alluded to in an earlier post.

Let me stress, though, that I don’t know how the report is constructed. I am only speculating based on behavior of the program.


#16

Hi Tut, no, I created two NORMAL sales invoices and then receipted an underpayment to one Customer (leaving a “normal” DEBIT balance) and an overpayment to the other Customer (leaving the CREDIT balance that you see). Both scenarios are perfectly realistic as customers both underpay and overpay. The system, as it is working at the moment, is exactly how I believe that it show work.


#17

@ozcpa, I agree that your scenarios of under- and overpayment are both realistic.

In my example, the customer with a positive Accounts receivable balance has two outstanding sales invoices, neither with anything paid against them. The customer with the negative Accounts receivable balance also has two invoices totaling 899. I received one payment of 2000, posting it to Accounts receivalbe => Lumen Lighting, with the invoice number left blank. Both sales invoices then showed Paid in Full. The customer’s Accounts receivable balance is -1101, but the credit balance didn’t show on the Aged Receivables report.

Here’s the twist, though. If I allocate the full 2000 to one of the sales invoices specifically, it shows as overpaid, the total Accounts receivable balance for the customer stays the same, but the Aged Receivables report now shows the credit balance:

It doesn’t matter which sales invoice I reference or if I split the transaction and overpay both. I get the same result.

So my speculation about the Aged Receivables report being constructed only from unpaid sales invoices was wrong. Once a credit balance is triggered by an overpaid invoice, the report seems to grab all a customer’s non-zero-balance invoices. Only @lubos knows for sure. However it’s done, it should be consistent. If a credit balance is going to be shown under some conditions, it should be shown under all. And if not under some, then not under any.


#18

Yes, it must be consistent. My contention has always been that the AR Aged Report really must should show ALL balances (both DEBIT and CREDIT) for ALL Customers because the AR Aged Report is (or should be) a representation of the total of the AR Control Account in the Balance Sheet. They really MUST reconcile. I have never come across a situation (in other systems) where the Aged AR Report doesn’t reconcile with the Balance Sheet. In fact, comparing those two reports is a key control in a large number of organisations. A similar situation should exist in relation to Accounts Payable.

@lubos can this be addressed so that it is consistent; preferably so that the Aged AR and AP Reports contain ALL their respective balances (and thereby reconcile with the respective Balance Sheet accounts)?


#19
  1. The views you quoted previously were expressed by users and not from the developers themselves.

  2. It appears that the changes you have noticed have been a by-product of other changes (handling over payments) rather then changes to the report it self based on various illustrated posts.


#20

Hi all!

I would like to comment with you my experience as an external auditor in this regard.

AR and AP reports (aged or not aged) MUST reconcile with the AR and AP balances in the Balance Sheet.

That said, this requirement must be fulfilled by companies in two ways:

  1. AR/AP report with a total balance that reconciles directly with the balance in books.
  2. AR/AP report with a total balance that doesn’t reconcile with balance in books, accompanied with a reconciliation of both balances (the one in the report and that one in the books).

In the case of Manager, information is integrated (meaning by this, that the software doesn’t require a process of recording transactions in the books through a batch process like we use to have not so many years ago). In that context, it doesn’t make any sense a situation like the one I describe in number 2. Balances must match.

A different approach would be (and this is something I always ask my clients especially in aged reports, this is just personal taste) to present separated debit and credit balances (not offset) because it eases the job of the auditor and provides information of potential unusual transactions related to sales and purchases and fraud schemes.

For example, a client that has an unpaid invoice (100€) due on Nov. 30 and a credit note or an overpaid invoice (150€) in the same period (in an aged report) let’s say 30-60 days due. The report ideally would show both amounts in two different lines in the same cluster (column).

I’m guessing this might be complex to code for developers, otherwise, all programs would do it or maybe I’m just picky and nobody else has seen the need of this amount of detail. :smiley:

Concluding: Yes, the report seems to be ok. Balances must match. My suggestion (not a request) for further detail is to show credit balance in a different row to provide more information.