Accounts Receivable section of Summary screen under cash-basis accounting

Under Cash basis of accounting, of course, there’s no Accounts Receivable account on the Balance Sheet.

Because the new Summary screen is essentially just a Balance Sheet and an Income Statement, then, businesses running under Cash basis can’t see their receivables on the Summary screen.

That’s a limitation. Receivables are still important for cash-based businesses, and the current status of receivables is something that should be shown on an operations snapshot for all businesses. It’s something that should be shown on the first screen, every time, no clicking required.

While I know one can change the Summary setting to Accrual so he can see receivables, that would affect Net Income and other figures, so the Summary would lose some relevance for a cash-based business.

Without changing the paradigm of the Summary functioning as a Balance Sheet and Income Statement, is there some middle ground that would at least give a 10,000-foot view of receivables and payables as well? Could a separate section be added to the top of the Summary screen for Cash-based businesses, with key operational snapshot information including most importantly Accounts Receivable (preferably with ageing) and Accounts Payable?

Ability to show figures in Summary tab on cash-basis is relatively new. To be honest, I’m not yet sure how to tackle this issue.

Maybe one solution would be to offer more granularity. For example, balance sheet could be shown on accrual-basis while profit & loss statement could be shown on cash-basis.

Interesting idea. That would solve the immediate problem. Would it raise any issues from accounting purists? (YKWYA!)

I still think the most useful thing would be adding a small box at the top (in addition to balance sheet and P/L statement) with the primary operational numbers including A/R with ageing, A/P with ageing, and perhaps Uninvoiced Time and Uninvoiced Expenses.

By the time you add all these things, @Jon, you are 90% of the way to accrual-basis accounting. Why not take the final step? The entire point of accrual accounting, of course, is that it shows you the true current position of the company.

@lubos, my personal opinion is that showing an accrual-based balance sheet and cash-based P&L would be misleading. Since under cash-based accounting income is generally recognized when received, not when earned or invoiced, may balance sheet accounts would not actually be accrual-based. Likewise, since expenses are recognized when paid, other accounts would be off.

I know there are hybrid accounting systems used in special situations, but I think these are far beyond the scope of Manager.

Tax reasons. My estimated tax payments are based on YTD cash receipts.

Operationally, I fully agree with you that accrual-basis is more “true.”

My goal here is to be hit in the face every day with a summary of cash-basis net income YTD (for gauging where I stand with my estimated tax payments) and current and aged receivables (so I know how well I’m doing with my collections and so I can click directly through to an A/R report). I have to print separate reports for this now; I’d like to be able to see them live in the Summary.

I do agree that for businesses paying income tax on cash-basis, seeing P&L on cash-basis is more real.

While balance sheet on accrual-basis is what every business should use regardless of method used to calculate income tax.

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