Reviewing Accounts Receivable
Any balances that appear on an accounts receivable report normally reflect the fact that a customer owes the business money. If the standard credit terms given to customers are 30 days from the invoice date, and there are a few balances that are 61 days overdue or more, these amounts should be investigated.
It could simply be that a customer is behind with payments and they need constant reminders before they pay. However, it's important to consider what else might have happened that means a business is reporting overdue customer balances. Here are some things to check:
- Has the business owner been paid in cash and not banked it?
- Is the bank fully reconciled, up to date, and all payments recorded?
- Has the customer transaction list been checked to see whether an invoice is a duplicate raised in error?
- Have any payments been received that have been incorrectly recorded?
- Allocated to the wrong invoice/customer.
- Recorded as a deposit...
