How to Read an Accounts Receivable Report in QuickBooks
Did you know the customers listed in the 1-30 day column on the Accounts Receivable Aging Summary are actually 1-30 days past due? The common misconception is the report reflects the number of days since you provided the service and issued the invoice.
It is important to note the phrase “past due.” The AR Aging Report is based on the number of days since the due date…the number of days the invoice is past due.
For example, on June 1st, you provided service to Wood's Garden Cafe and gave the customer 30 days to pay. When you run the report on August 8th, the customer shows up in the 31-60 day column.
At a glance, it is tempting to not consider Wood's Garden a collection problem because they are in the 31-60 day column.
But wait a minute.
We provided service on June 1st…today is August 8th…that is 68 days since we provided service to the customer.
For 68 days we have provided an interest free loan to the customer. In the meantime, we had to either use our cash reserves or borrow from our line of credit to pay our employees and vendors while we wait for the customer to pay us.
Check out this video to learn more about accounts receivable reports including:
- Which Accounts Receivable reports you and your accounting clerk should review
- How to read the AR Aging Summary report
- Differences between the AR Aging Summary report and the Collections Report
- How to read the Collections report
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