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One of the most important things that an entrepreneur can do that can impact the cash flow in their business says Edmonton bookkeeping, is learning what an Accounts Receivable aging summary is, and how best to read it. The reason why is because it can be so significant in helping an entrepreneur remain cash flow positive in their business, as well as learning what they need to do in their business to continue to generate income. Therefore, business owners should learn early on their entrepreneurship, as soon as they start invoicing clients, what an Accounts Receivable aging summary is, how to read it and how to use it.

Business owners should understand what an account receivable is. Accounts Receivable refers to the amount of money that the customer owes a business owner but has not paid yet. Essentially it is the credit that a business has extended to a customer. Therefore, and Accounts Receivable aging summary is a list of all of the customers that owe money to a client and all of the amounts that they owe. It is important that business owners understand that the Accounts Receivable aging summary is organized by date left to right left being the invoices that are most recent, left being the most outstanding invoices.

Entrepreneurs should also understand accounts receivables get recorded. When an entrepreneur finishes a project or service for a customer, they will generate an invoice. That invoice will appear on the Accounts Receivable aging summary for that amount, listed in the far left column under the most recent date. As soon as the customer pays that amount, it will be deleted from the Accounts Receivable aging summary report.

Business owners also wonder what another report and Accounts Receivable is recorded on. Edmonton bookkeeping says that it also appears on the balance sheet of the business because it is also considered an asset business owners should know that the assets are listed on the balance sheet at the top in order of liquidity. Edmonton bookkeeping says that this means that cash appears at the top and they should know that Accounts Receivable is directly under cash. This is money that should be considered money that a business owns, but just have not received yet, therefore, it is extremely important that entrepreneurs treat this money as if they already have it, because on paper they do.

Business owners should also understand that amounts are going to exist on the Accounts Receivable aging report for as long as they are owed. It is extremely important that business owners call clients that owe them money on a regular basis, as well as sending out statements is that business owners can ensure that they are bringing money inconsistently. The longer an invoice is left outstanding, the harder it is to pay.

Edmonton bookkeeping says that by being familiar with Accounts Receivable aging summary, and what it means for their business can help entrepreneurs be proactive in their business and understanding how much money they have to deal with, and how proactive they need to be in collecting money from their client.

Edmonton Bookkeeping | What To Look For On Accounts Report

A business owner should understand that when they start selling a product or delivering a service and they are not getting paid for that product or service immediately, it becomes an account receivable says Edmonton bookkeeping. And the reason why this is important is that business owners need to be aware of how much money they are owed so that they can keep track of it to ensure that they are getting paid.

Once an entrepreneur understands what their Accounts Receivable is, and what it looks like, they should understand that they should be reviewing the statement regularly, not only to see the individual amounts that they are owed but decedent generally how much money they are owed in their business. Edmonton bookkeeping says that the reason for this is because it can indicate to an entrepreneur if they are potentially going to have a cash flow issue, so they can be proactive, or if their marketing efforts are extremely effective, is that business owners know what they can continue to do, or increase in their business.

An entrepreneur should know what it means when their Accounts Receivable drops down in value significantly. While this might mean that an entrepreneur has just had an influx of payments, it also means that there is a future cash flow issue. The reason is that if there is no more invoices taking the places of the ones that they have paid, that means that a business owner might have a problem with cash flow because they have no scheduled money coming in. When an entrepreneur sees a low Accounts Receivable, they should be proactive in their business says Edmonton bookkeeping in engaging in revenue-generating activities and increased marketing.

When an entrepreneur sees that the Accounts Receivable is very high, they should investigate the report in order to gain an understanding of why that amount is high. If the date on the invoices are very recent, this is a good sign, because it means that an entrepreneur likely is seeing an influx of new customers, because the marketing efforts have paid off. If this is the case, entrepreneurs should know what they need to do in order to continue what they are doing, to continue bringing revenue into their business, or increase it more so that they can become even more successful.

Edmonton bookkeeping says that if the Accounts Receivable is high, the invoices are also very old, is is a bad sign, because it means that an entrepreneur is having a hard time collecting money from clients, which could indicate a potential cash crunch in the near future. Business owners should endeavor to ensure that they never allow their Accounts Receivable to have many extended invoices on them, because they should be more proactive in their collection calls says Edmonton bookkeeping.