Bookkeeping Services From $150 Per Month

No Catch Up Fees & Free Incorporation

Get Started

One of Edmonton’s highest rated Bookkeepers!

Edmonton Bookkeeping Icon 5 Stars

Read Reviews

Edmonton Bookkeeping Preferred Bookkeeper

It is extremely important for entrepreneurs to understand what their Accounts Receivable aging summaries are telling them says Edmonton bookkeeping. As soon they are selling products and services to customers, they need to be aware of what this summary is and how to use it. Once their customer owes them money and has an invoice that they are going to pay later, business owners should understand how that looks on their Accounts Receivable aging summary in order to use it effectively in their business.

When an entrepreneur is looking at their AR summary, they should note that it is organized very specifically, getting a list of all of the customers who owe money to an entrepreneur, the amount of money that they owe, and organized by date. This is very important that it is organized this way so that a business owner can see how old the invoices they have are, so that they can contact those clients first to make payment.

It is important that entrepreneurs understand that once they generate an invoice in their business, and have an Accounts Receivable, is actually considered an asset in the business and listed on the balance sheet. Edmonton bookkeeping says that many entrepreneurs are not aware of this, and believe that that amount is only considered assets when they receive the payments in their bank account. However, business owners should be aware that when they are looking at their financial statements, their Accounts Receivable will be included in this total.

Edmonton bookkeeping says that because the amount that a business owner has outstanding in their business is considered an asset, it is extremely important for an entrepreneur to understand the need to keep the information very current. By being diligent in collecting money from their clients, but also writing off bad debt if they are unable to claim it, can help keep the Accounts Receivable aging summary accurate, so that when an entrepreneur looks at it, or their balance sheets, it represents a very real amount of money that an entrepreneur is actually expecting to receive into their business. All of the amounts listed in the summary should represent very real amounts of money that an entrepreneur is expecting to get.

When entrepreneurs are looking at their Accounts Receivable aging summary, they should ensure that they are also using the information to contact clients that owe the money Edmonton bookkeeping recommends that entrepreneurs send out monthly statements to all customers that have any outstanding invoices, and the longer their past due, the more frequently they get phone calls. By calling minimum once every two weeks, and increasing to frequency of every day for clients that are more than ninety days outstanding can help ensure a business owner is being proactive in collecting the money that they are old.

By understanding their Accounts Receivable aging summary, entrepreneurs can significantly improve the collection procedures they have in their business, to encourage their clients to pay them the amounts of money that they owe, so that business owners can ensure they have a positive cash flow in their own business.

Edmonton Bookkeeping | Why Are Accounts Receivable Summaries Important

It is extremely important for entrepreneurs to be reviewing their Accounts Receivable aging summary on a regular basis says Edmonton bookkeeping. A great practice to get into, would be for entrepreneurs to look at this information as often as they are doing bank reconciliation, so that they can see how much money they have in their business to make payments, and then look at their AR aging summary to see how much money they can expect to bring into their business.

In order for entrepreneurs to learn how much money they are expecting into their business by looking up their Accounts Receivable aging summary, Edmonton bookkeeping says that they need to learn how to do this efficiently. By looking at the grand total of all of the amount that they are owed by all customers, as well as the date of the invoices on the money that they are owed can give an entrepreneur great insight to the incoming finances of their business.

For example, if an entrepreneur looks at their Accounts Receivable and sees that it is extremely high, they also need to look at the date of the invoices to able to tell what that means for their business. If they have very new dates on the invoices, and they are all outstanding and not past-due, Edmonton bookkeeping says that this is a great sign for entrepreneurs. It means that they have been generating enough sales in their business, and they should expect to get payment in the next thirty days.

However, if an entrepreneur looks at their Accounts Receivable aging summary, and sees that the high amount that they are owed is also accompanied by invoices with much older dates on them, this should cause concern for an entrepreneur. Not only are they not collecting money efficiently from their clients, but there are also facing a cash flow problem, because those invoices are not getting paid off. Edmonton bookkeeping recommends that entrepreneurs do two things at this point, start taking collection calls to all customers, and increasing the frequency of those calls until they get paid. Also, an entrepreneur needs to increase their sales, so that they can bring in new invoices that are more likely to pay much quicker.

If an entrepreneur sees that they have a low Accounts Receivable, this should be cause for concern for entrepreneurs says Edmonton bookkeeping. This means that an entrepreneur is facing a potential cash flow issue, they should work hard to increase their sales to address that.

When entrepreneurs review their Accounts Receivable aging summary at the same time as their bank reconciliation, will be able to gain great insights into their business, and help them make collection calls to replace the money that they are dispersing. Learning how to do this can help an entrepreneur keep the cash flow positive in their business, so that they can meet their own financial obligations, as well as help them significantly grow their business.