Have issues with your Accounts Payable being out of balance? Click here for help.

Background

The balance of the Accounts Receivable account (A/R) on your Balance Sheet should be exactly the same as the amount in the Total Due field on your Receivables Reconciliation Report for the same date. Please note that you should always use the Receivables Reconciliation to compare against (not the Aged Receivables Report).

AccountEdge is a double-entry accounting system which means that each transaction affects two separate accounts. This is important to remember, as when recording many transactions the Accounts Receivable account will automatically be affected and you will only be choosing the other account you want to affect.

Common Causes of A/R Being Out of Balance

• The Accounts Receivable account was used as the allocation account in any transaction (e.g., disbursement (CD), receipt (CR) or general journal (GJ) entry)
• The Accounts Receivable account was used as the allocation account on a Sales transaction
• A Customer pre-payment exists, so AR will be Out of Balance until an Invoice is created
• Recently Started a New Fiscal Year
• Incorrect Linked Accounts
• Incorrect accounts for items

A/R Account Used as the Allocation Account of a Transaction

In standard circumstances, the Accounts Receivable account should not be the allocation account on a transaction. Since the Accounts Receivable account is a linked account in AccountEdge it's often the other half of a transaction that you record.

Example: If you record a Service Sale transaction you choose an income account as your allocation account. That way, when the transaction is recorded, it (credits) increases your income and automatically (debits) increases your accounts receivable.

Finding Whether A Transaction Was Applied To Accounts Receivable:

1. Open your AccountEdge company file
2. Click Find in the bottom row of tabs
3. Click on the Account tab
4. Select the Accounts Receivable account number
5. Use the date range 1/1/1990 to 12/31/9999 (this will include ALL transactions)

This will show you any transaction that hit the Accounts Receivable account. If you look in the SRC column it will tell you the source journal of the transaction.

Many of the transactions will be sales (SJ) (which should be there) and payments against sales (CR) (which should also be there). At the same time - receive money transactions and sales that have used the Accounts Receivable account as the allocation account can also show up here and shouldn't. In most cases, General Journal entries (GJ)* and Cash Disbursements (CD) should NOT appear.

You can click on the arrow (or double arrow) next to any transaction to look at the full transaction and see whether it is a transaction that should exist.

Once you are looking at the transaction you can select Edit > Delete or Edit > Reverse from the menu bar at the top of the screen to remove/reverse any transactions that shouldn't have been recorded against the Accounts Receivable account. You can also change the account from the Accounts Receivable account to a more appropriate account if desired.

Note: Sometimes accountants will create General Journal entries to balance the Accounts Receivable account. You should speak with your accountant before modifying/deleting any entries they may have made.

Customer Prepayment Exists

If you have a sale that is an invoice (not an order - the status of the sale has to be invoice for this error out of balance to occur) and the sale is dated AFTER the date of payment for this invoice this will cause an out of balance issue. This most often occurs when a payment is entered with an erroneous date.

Example: I have an invoice I've created for John Smith on 7/20/20XX for $5,000. I also have a payment for this invoice - but I've mistakenly dated it 7/15/20XX. If I run my Receivables Reconciliation report for 7/15/20XX I will show that $5,000 as an Out of Balance amount because the payment was made before the date of the invoice.

A good way to test this to run the Receivables Reconciliation report (Exceptions Report) for a date very far in the future. If the Out of Balance amount disappears then it is likely that the Out of Balance amount was caused by a customer pre-payment.

Recently Started a New Fiscal Year

If you have a purchase order dated in FY 20XX (11/30/XX) but the payment isn’t made until FY 20X1 (1/20/X1) and the Start A New Year was processed (3/15/X1). The purchase order that refers to that vendor payment is no longer on file (however, once you run the Payables Reconciliation report for, let's say 3/30/X1 you will be back in balance).

Incorrect Linked Accounts

This one can be tricky. If you've changed the linked Accounts Receivable account it can cause discrepancy. Finding out whether it's been changed is easy enough - the tricky part comes in during the resolution.

To check the linked Accounts Receivable account:

1. Go to Setup > Linked Accounts > Sales Accounts from the menu bar at the top of the screen
2. The first account listed is your linked account for Accounts Receivable. This should be your A/R account (there can only be one)

If the linked Accounts Receivable account was changed to an incorrect account and any transactions were recorded using this improper account ALL sales transactions against the improper account need to be re-recorded. You can do this by opening each sale individually and putting an asterisk (*) in the notes field and then by hitting ok. This will re-record the transaction with the proper linked account.

Note: Users who have the multicurrency preference turned on will also need to check their linked Receivable account for any currencies used. You can do this by:

1. Go to Lists > Currencies from the menu bar at the top of the screen
2. Click on the arrow (double-arrow) next to any currency that you use
3. Click on the Receivable Accounts tab
4. The first account listed is your linked account for Accounts Receivable for this currency. This should be an A/R account for this currency. You can follow the above process to re-record any improper transactions.

Incorrect Accounts for Items

Check the Profile of Items, verifying correct Expense or Cost of Sales account, Income account, and Inventory account. None of these should have your linked A/R account listed. A fast way to do this would be to select File > Export Data > Items. Select to export the Item Number. Then select the Buy, Sell, Inventory fields, as well as the account fields for these fields. Open the resultant file in Excel or Numbers. Verify accounts.

If anything is incorrect you would need to adjust the item and then re-record the sales/purchases associated with these incorrect items as per the instructions in the Incorrect Linked Accounts section.

Helpful Reports

Exceptions Reports

You can run the Receivables Reconciliation Exception report (this is different then the standard Receivables Reconciliation report). You can find this by:

1. Go to Reports > Index to Reports from the menu bar at the top of the screen
2. Click on the Accounts tab
3. Scroll down until you see the bold heading "Exceptions"
4. Run the Receivables Reconciliation, Future Dated Transactions and Prepaid Transactions - all can be helpful in finding transactions that may be problematic

Aging Report

Don't run the Receivables Aging report if you are looking to only include transactions until a particular date. Run instead the Reconciliation Summary or Reconciliation Detail report under Receivables.

Account Transactions or Trial Balance Detail Reports

These reports can be run specifically for your A/R account and may be helpful in sorting through the transactions. To run these reports:

1. Go to Reports > Index to Reports from the menu bar at the top of the screen
2. Click on the Accounts tab
3. Account Transactions is under the bold heading Accounts and Trial Balance Detail is under the bold heading General Ledger Trial Balance
4. Select whichever report you want to run and click customize
5. Select ONLY the A/R account you want to run this for as well as a large date range (1/1/1990-12/31/9999)

Final Note

Historical Sales and Credit Memos will debit and credit your Accounts Receivable account; however, these transactions are correct. Do not remove them.