How QuickBooks Online Helps You Manage Receivables

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One day, while skimming through your financial in order to find out how your business is doing, you notice a large balance on your receivables. That means you made a lot of sales, right? Well, yes. That also means you’re raking in the cash from all those sales, right? You check the bank balance, and your face falls slightly as you realize that far from being flush with money, you’re in danger of falling behind on rent for your office space. Your amazing sales record notwithstanding, your business is struggling to survive because customers aren’t paying you on time.

What are receivables and why are they important?

In accounting lingo, Accounts Receivable refers to cash that you legally own but are yet to have ‘in hand’. From a legal perspective, there is no difference between the two types of cash. But reality doesn’t agree, because of the simple fact that you can spend cash-in-hand but not cash-in-waiting.

A business has income, and it has expenses. There needs to be a certain surplus of income for the continued existence and viability of the business. This is why managing receivables is important. If your customers don’t pay you on time, you might soon run out of money to run your day-to-day operations. Cash-in-waiting is no good here, since you can’t pay others with it.

Imagine receivables as little loans that you gave out to your customers. They owe you, and the sooner they pay you the better. However, as you know already, getting people to pay is hard, and it’s always prudent to assume that a certain percentage of customers will be later on their payments, and a smaller percentage will never pay you back. How much of the owed money you’ll eventually see, and how soon, really depends on how well you manage your receivables.

How QuickBooks Online helps

The best possible method of ensuring that receivables are managed properly is to keep yourself well-informed. How much is owed? How many have paid their debts? How many are falling behind? How many have already fallen behind? How many have fallen behind so far that they are unlikely ever to pay? And exactly how much do each of these categories of debtors owe? Having answers to these questions in front of you, not once in a while but on a regular basis, will enable you to manage receivables in the most productive way possible.

QuickBooks Online helps you do just that, by furnishing you with reports that allow you to assess the situation with the Accounts Receivable of your business. These reports show, among other things, the aging of debts and details about each debtor. Other than providing useful information in the form of concise summaries, QBO also saves you the time-consuming process of manually consulting the records. With everything automated, compiling reports is a matter of seconds.

QuickBooks Online A/R Reports

  1. A/R Aging Summary

QBO_AR Aging Summary

This report will tell you, at a glance, how many receivables are past due, how much they amount to and which customers they belong to, in addition to their current debts. The receivables are categorized by the amount of time that has passed since they were due. In other words, this is the overall summary of the Accounts Receivables.

  1. A/R Aging Detail

QBO_AR Aging Detail

As you may have guessed from the name, this report shows basically the same information as the A/R Aging Summary, with a few more details such as the dates and types of transaction.

  1. Customer Balance Summary

QBO_Customer Balance Summary

The Customer Balance Summary forgoes the aging information, and simply displays the amounts due from each customer. This is a straightforward way of finding out how much of your money is tied up in debts, and whether or not it’s time to act. This might be the first report you would want to see.

  1. Customer Balance Detail

QBO_Customer Balance Detail

Aside from the balances, this reports shows other details about the customer’s account, such as the date of transactions and due date.

  1. Collections Report

QBO_Collections Report

This reports gives you an idea of how good your business is at collecting debts, by showing how many days past due each debt is. After taking a look, you can decide whether or not the debt-collection is going too slowly.

  1. Invoice List

QBO_Invoice List

In a nutshell, this is a report showing all the sales transactions in chronological order, but with an additional column that shows how much each customer still owes you.

  1. Statements List

QBO_Statement List

Of course, much depends on the business policies involved in dealing with receivables. However, QBO is a powerful tool that helps you manage your business better, and giving you comprehensive information about receivables is one of the most important ways it does so.