Accounts Receivable Aging

Financial models should work harder for you than you do on them. Here's how to set up a model that updates itself using dynamic sum arrays. This accounts receivable aging schedule is driven by dates and amounts in a dynamic table. The table can connect to an AR aging file from Quickbooks, Xero, NetSuite or other accounting software. A BYCOL function dynamically sums the correct range, no matter how the data shifts. If invoices are paid partially, and amounts change, no manual update is needed. Power Query can bring in the new values and the dynamic array captures it perfectly. If collection dates shifts from 8/18 to 9/18, the Treasurer or AR clerk can make the change in the system, the data updates and is captured automatically in the collections forecast. Did you notice that 10/7 and 10/14 automatically appeared when the invoice dates changed? That's how you get financial models to do the not-so-exciting, yet extremely important, work on your behalf.

You see high revenue on your P&L and think you’re doing great, but… That’s only until you look at your cash flow. The most valuable exercise every month is to compare your revenue with the cash flow you actually received (or not) from customers. Hack: You can even create a graph to track the dynamics of this difference. Unpaid invoices are a huge pain point and a top reason for cash flow gaps. ✅ Here’s how we fixed it: We built a custom, real-time Aging Report that integrates directly with QuickBooks, Xero, Bill.com, and other systems. In real time, you get an updated view of who owes you money, exactly how overdue the invoices are, and what cash is flowing in. Once an invoice is paid, it’s automatically removed from the list. Clients can immediately see the invoices that are: ▪️1–30 days overdue ▪️31–60 days overdue ▪️60+ days overdue (possibly bad debt) This allows them to take different actions for different groups: ▪️Send emails ▪️Verify credit card details ▪️Stop providing services for unpaid invoices ▪️Or at least create much more realistic cash flow budgets We also believe that receivables should be tracked weekly—not just at the end of the month. By simply tracking these payments and taking weekly actions, some of our customers have increased their cash inflows by 40%. It’s hard to believe such a simple, powerful report can have such an impact. Hundreds of thousands of dollars in cash gaps have been fixed. May the Cash Flow be With You 💚

In SAP, the process of managing Accounts Receivable (AR) involves several key transactions, often carried out through the SAP Financial Accounting (FI) module. Below is a list of commonly used T-codes for Accounts Receivable in SAP: 1. Posting Customer Invoices and Payments: • FB70 – Post Customer Invoice: Used to post an invoice for a customer, which updates accounts receivable and sales revenue. • F-28 – Post Incoming Payments: Used to post a payment received from a customer (could be cash or transfer). • F-32 – Clear Customer: Used to clear open customer items (like payments or credit memos). 2. Customer Account Maintenance: • FD01 – Create Customer Master Data: Allows you to create a new customer in the system. • FD02 – Change Customer Master Data: Modify existing customer data. • FD03 – Display Customer Master Data: Display customer details without making changes. 3. Credit Management: • FD32 – Change Customer Credit Management: Used to update credit limits for customers. • FD33 – Display Customer Credit Management: Display customer credit information. 4. Customer Payments and Clearing: • F-39 – Post Payment: Manual posting of customer payments. • F-44 – Clear Open Items: Clears open customer items manually, like applying a payment to a specific invoice. 5. Account Reconciliation and Aging Reports: • F.13 – Automatic Clearing: Clears open items for customers automatically. • F-30 – Post Customer Down Payment: Used to post an advance or down payment made by a customer. • FS10N – Display G/L Account Balances: Can be used to check the balance for accounts receivable (G/L 100000, for example). • S_ALR_87012168 – Customer Open Items List: Displays open customer invoices and payments. • F.22 – Customer Aging Report: Provides a list of receivables broken down by overdue periods. 6. Credit Memos and Adjustments: • FB75 – Post Customer Credit Memo: Used to post credit memos (reduce amounts due from customers). • F-27 – Post Credit Memo for Customer: Another way to post credit memo for a customer. 7. Dunning (Reminders for Outstanding Payments): • F150 – Dunning: To create and send dunning letters to customers for overdue payments. • F150B – Dunning History: Displays the dunning history for customers. 8. Reports and Analysis: • S_ALR_87012182 – Customer Receivables Aging Report: Used to analyze aging of accounts receivable. • F-23 – Post Customer Payment and Clear: This is an alternative method for handling incoming payments and clearing. These T-codes cover a broad range of Accounts Receivable functions in SAP, from basic posting and customer account management to credit control, dunning, and reporting. However, If there is anyother T-codes, feel free to share.

I built an Accounts Receivable dashboard that enables the accounting/Finance team within the organisation reduce overdue invoices by at least 20% and improve cash flow forecasting accuracy. This will be a game changer to any CFO, Account receivables team, Sales and credit control team. Here is the link to the interactive dashboard 👉  https://lnkd.in/eAu23csr An Accounts Receivable (AR) Dashboard in Power BI is critically important for an organization because it transforms raw financial data into clear, actionable insights. Here's a breakdown of why it matters: 1. Real-Time Visibility of Cash Flow - Why it matters: Cash flow is the lifeblood of any business. As they say cash is King. 😊 What the dashboard does: Provides up-to-date information on outstanding invoices, overdue accounts, and payment trends, helping finance teams react quickly. 2. Improves Collections Efficiency What the dashboard does: Highlights high-risk accounts, overdue balances, and payment patterns, allowing teams to prioritize follow-ups effectively. 3. Reduces Bad Debt Risk What the dashboard does: Flags accounts with a history of delayed payments, enabling early intervention before debt becomes unrecoverable. 4. Better Decision-Making for Credit Policies Why it matters: Extending credit to the wrong customers increases financial risk. What the dashboard does: Provides insights into customer payment behavior, guiding decisions on credit limits and terms. 5. Time Savings & Automation Why it matters: Manual reporting is time-consuming and error prone. What the dashboard does: Automates data integration and updates, freeing up finance staff for more strategic work. 6. Data-Driven Forecasting Why it matters: Anticipating cash inflows helps with budgeting and planning. What the dashboard does: The Account receivables dashboard enables trend analysis and predictive modelling based on historical receivables data. Finally: An Accounts Receivable Dashboard in Power BI is more than just a reporting tool—it's a strategic asset. It enhances cash flow management, reduces financial risk, and empowers decision-makers with clear, real-time insights that support business stability and growth. #ACCA #ICAN #ICEAW #CFA #AR Dashboard #Accounting #Finance #Forcasting #Budgeting #Cashflow

𝗗𝗮𝘆 𝟭𝟮 – 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗮𝗹 𝗔𝘂𝗱𝗶𝘁 𝗟𝗲𝗮𝗿𝗻𝗶𝗻𝗴 𝗛𝗼𝘄 𝘁𝗼 𝗔𝘂𝗱𝗶𝘁 𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝘀 𝗥𝗲𝗰𝗲𝗶𝘃𝗮𝗯𝗹𝗲 Auditing receivables goes beyond just matching numbers. It requires a clear understanding of revenue recognition, realizability, and the company’s credit policies. 𝐇𝐞𝐫𝐞’𝐬 𝐡𝐨𝐰 𝐰𝐞 𝐚𝐩𝐩𝐫𝐨𝐚𝐜𝐡𝐞𝐝 𝐢𝐭 𝐭𝐨𝐝𝐚𝐲: ✅ 𝐋𝐞𝐝𝐠𝐞𝐫 𝐌𝐚𝐭𝐜𝐡 – Cross-check receivables balance in trial balance with the debtor’s ledger and financial statements. ✅ 𝐃𝐢𝐫𝐞𝐜𝐭 𝐂𝐨𝐧𝐟𝐢𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐬 – Obtain balance confirmations directly from debtors. If not received, perform alternate procedures like subsequent receipt checking. ✅ 𝐂𝐫𝐞𝐝𝐢𝐭 𝐁𝐚𝐥𝐚𝐧𝐜𝐞 𝐂𝐡𝐞𝐜𝐤 – If a debtor shows a credit balance at year-end, it's likely an advance. Verify when the sale is booked in the next financial year. ✅ 𝐎𝐩𝐞𝐧𝐢𝐧𝐠 𝐁𝐚𝐥𝐚𝐧𝐜𝐞 𝐑𝐞𝐜𝐨 – Reconcile opening balances with previous year’s signed financials. ✅ 𝐀𝐠𝐞𝐢𝐧𝐠 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 – Prepare an ageing schedule as per Schedule III (0–6 months, 6–12 months, etc.), and highlight long-outstanding debts. ✅ 𝐒𝐭𝐚𝐠𝐧𝐚𝐧𝐭 𝐁𝐚𝐥𝐚𝐧𝐜𝐞𝐬 – If opening and closing balances are same and no transactions occurred during the year, inquire with management whether the amount has been written off or is still recoverable. ✅𝐓𝐃𝐒 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞 - Reco of sales with 26AS and mapping of TDS receivable with 26AS 💡 𝗔𝗱𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗖𝗵𝗲𝗰𝗸𝘀 𝗬𝗼𝘂 𝗦𝗵𝗼𝘂𝗹𝗱 𝗡𝗼𝘁 𝗠𝗶𝘀𝘀: 1️⃣𝐒𝐮𝐛𝐬𝐞𝐪𝐮𝐞𝐧𝐭 𝐑𝐞𝐚𝐥𝐢𝐳𝐚𝐭𝐢𝐨𝐧: Verify whether amounts have been received after year-end. It gives strong audit evidence for recoverability. 2️⃣𝐑𝐞𝐯𝐢𝐞𝐰 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭𝐬/𝐈𝐧𝐯𝐨𝐢𝐜𝐞𝐬: Check for sales invoices, terms of credit, and agreement clauses that might affect realization. 3️⃣𝐑𝐞𝐥𝐚𝐭𝐞𝐝 𝐏𝐚𝐫𝐭𝐲 𝐁𝐚𝐥𝐚𝐧𝐜𝐞𝐬: Ensure disclosure and test recoverability separately if related parties are involved. 📌 𝗣𝗿𝗼 𝘁𝗶𝗽: Receivables not just show revenue, they reflect the company's cash flow cycle. Be alert and analytical while verifying them. 📂 𝗗𝗼𝗰𝘂𝗺𝗲𝗻𝘁𝘀 𝗩𝗲𝗿𝗶𝗳𝗶𝗲𝗱 𝗗𝘂𝗿𝗶𝗻𝗴 𝗔𝘂𝗱𝗶𝘁: 👉Debtor Ledger 👉Sales Register 👉Debtor Confirmations (Direct/Alternative) 👉Bank Statement (for subsequent receipts) 👉Ageing Report 👉Sales Invoices 👉Agreement with Debtors (if any) 👉Previous Year’s Financials    🛑𝗕𝗼𝗻𝘂𝘀 𝗧𝗶𝗽: Always ask about long-pending balances – they might need provision or write-off. If you want a checklist for auditing receivables, comment your Gmail ID – I’ll share it with you! 📌 𝐏𝐒: 𝐃𝐨𝐧’𝐭 𝐣𝐮𝐬𝐭 𝐯𝐞𝐫𝐢𝐟𝐲 𝐛𝐚𝐥𝐚𝐧𝐜𝐞𝐬, 𝐭𝐫𝐲 𝐭𝐨 𝐮𝐧𝐝𝐞𝐫𝐬𝐭𝐚𝐧𝐝 𝐭𝐡𝐞 𝐰𝐡𝐨𝐥𝐞 𝐬𝐭𝐨𝐫𝐲 𝐛𝐞𝐡𝐢𝐧𝐝 𝐧𝐮𝐦𝐛𝐞𝐫𝐬. 𝐓𝐡𝐚𝐭’𝐬 𝐰𝐡𝐞𝐫𝐞 𝐫𝐞𝐚𝐥 𝐥𝐞𝐚𝐫𝐧𝐢𝐧𝐠 𝐛𝐞𝐠𝐢𝐧𝐬. #auditlearning #caarticleship #debtorsAlsudit #auditchecklist

If you're not tracking who owes you, you're not running a business, You're hoping and that’s a move towards disaster Here’s my client’s story: A bootstrapped D2C brand came to us with a cash crunch. Their sales were up, but their bank balance didn’t reflect it. We asked: How many clients owe you money right now? When are those payments due? Who’s following up? No answers. Here’s what we built for them: 1- A monthly report on receivables aging 2- An AR tracker that flagged overdue accounts weekly 3- Tiered follow-up sequences  gentle reminders to escalation We also trained the internal team to own collections , not outsource it to finance only. Within 2 months: - Overdue payments dropped by 50% - DSO improved by 20 days - Founders finally had breathing room to plan ahead If you don’t treat AR like a core function, you’ll always feel short on cash , no matter how much you sell. Don’t wait till it hurts. Fix your receivables process now. #finance #receivablesmanagement #accountsreceivable

If you're struggling with cash flows, here's a simple tool that can help ⤵ An accounts receivable ("A/R") aging report is an invaluable tool for every business to help track and manage outstanding customer invoices and payments. ➡ What is an A/R aging report? It's a report generated within your accounting software that lists each outstanding customer invoice and puts them into buckets based on when they're due. Typically, the buckets are "Current", 0-30 days, 31-60 days, 61-90, etc. past due, so you can see what percentage of your total A/R is current versus past due. ➡ How do I use the A/R aging report? ✅ Accounting/finance staff should review the A/R aging reports frequently with leaders and customer relationship managers. This proactive process can help to identify potential problems before they become major problems. ✅ Use software to generate and deliver electronic invoices to your customers. This is much more efficient than manually preparing invoices, plus it allows you to set up electronic payment options and automated reminders to alert your customers of the upcoming due dates of their invoices. ➡ A success story In 2020, I led accounting and finance for a telehealth staffing company. Because of the impact of COVID on hospitals (who were our primary customers), I was very concerned about customer payments slowing down, so I began meeting with my team weekly to review the A/R aging report. We would start by reviewing any customers who were past due. If my team wasn't able to get a response from the customer after emailing and calling them, then I would step in to help, or get assistance from our account managers. Then we would review the customers who were current. I encouraged my team to send reminders about upcoming invoice due dates and to reach out proactively to customers with approaching due dates to ensure that there were no issues that would hold up payment of the invoices. The result? We actually improved our collections cycle during the height of the pandemic. Our average days to collect payments improved from around 35-40 days down to around 25 days! 🙌🏻 ________________________________________________________________________________ I help purpose-driven organizations gain financial clarity and insights. If you're having trouble with cash flows, or have questions, I'd love to talk with you about how we can help. Feel free to send me a DM or email me at sfuller@virtusaccounting.co. Virtus Accounting Solutions, LLC #smallbusinesses #entrepreneurship #SmallBusinessSuccess #financialclarity #FinancialWisdom #Entrepreneurshiptips #faithinbusiness #faithbasedbusiness #missiondriven #purposedriven #CFOServices #CashFlowFridays

Accounts Receivable Management refers to the process of overseeing and managing the outstanding payments a company is owed by its customers. This area of financial management is critical for maintaining cash flow and ensuring that the business can continue to operate smoothly. Effective management of accounts receivable helps a business minimize the risk of bad debts, improve liquidity, and maintain strong customer relationships. Here are some key components: Key Components of Accounts Receivable Management:  1. Credit Policy: Setting clear credit terms (such as the time frame for payment, interest rates for late payments, etc.) for customers. This helps in reducing the risk of non-payment or delayed payments.  2. Invoicing: Ensuring accurate and timely invoices are sent to customers, detailing the amount due, payment terms, and due date.  3. Aging Report: Regularly reviewing an accounts receivable aging report, which categorizes outstanding invoices based on how long they’ve been overdue (e.g., 30, 60, 90 days). This helps identify slow-paying customers and potential collection issues.  4. Collection Strategies: Developing and implementing strategies for following up on overdue accounts, including reminder emails, phone calls, or sending collections letters. Sometimes, escalating to a collections agency or legal action may be necessary for prolonged non-payment.  5. Payment Methods: Offering convenient and secure payment options for customers, such as bank transfers, credit cards, or online payment portals, can encourage timely payment.  6. Bad Debt Provision: Estimating and setting aside a reserve for potential bad debts, which is a portion of accounts receivable considered uncollectible.  7. Cash Flow Forecasting: Monitoring and forecasting cash flow based on accounts receivable can help the business plan for future needs, including expenses, investments, or growth opportunities.  8. Customer Relationship Management: Balancing assertive collection with maintaining good relationships with customers. This helps in reducing conflicts and encourages continued business. Best Practices:  • Clear Communication: Clearly communicate payment terms and expectations upfront with customers to avoid misunderstandings.  • Regular Monitoring: Stay on top of accounts receivable balances and review them frequently to identify potential issues early.  • Leverage Technology: Use accounting software to track invoices, payments, and aging reports automatically.  • Outsource When Needed: In cases where collection efforts are not yielding results, consider working with a collections agency or other third-party services. Proper management of accounts receivable is essential for financial health and operational efficiency, ensuring a company can manage its expenses, growth, and investments effectively.