A/R Reconciliation

Before performing the Month End routine to close an accounting period, be sure to reconcile the Accounts Receivable Aging Schedule to the general ledger Trial Balance.  The total amount of the aging schedule should match the balance of the accounts receivable account(s) on the trial balance as of the same period end date.  For your convenience, the on-line Help system contains a worksheet that may be printed out to assist you in your reconciliations.  Please go to Help > Contents > Frequently Asked Questions and double click on the hyperlink titled Print the Month End Reconciliation Worksheet.

Depending on the setup of your system, there could be three different accounts in the general ledger that make up the total of the accounts receivable.  The Receivables > Properties allows one general ledger account (Accounts Receivable-Misc) to hold the unpaid balance of all miscellaneous invoices (non-contract billings) and the Job Cost > Properties allows two general ledger accounts (A/R-Current and A/R-Retention) to hold the unpaid balances of the contract billings.  The sum of these three accounts should equal the total of the aging schedule.  Be sure to use the same period end date on both reports and be sure to print the aging schedule as 'reconstructed'  with the unbilled retention included.

If the totals of both reports are not equal, then try printing a General Journal Report in the Ledger system for the same accounting period to see if any general journal entries were coded to the accounts receivable account(s).  The only entries that should ever post to the receivable accounts are miscellaneous invoices or contract billings and cash receipts (direct payment, joint checks, or backcharges only).  The only exception to this rule would be when a new AccuBuild customer is establishing beginning balances in the general ledger.

Another entry that will prevent the Aging Schedule from tying to the Trial Balance is a contract billing with an item that is entered with the income account the same as the accounts receivable accrual account.  This type of entry would post both a debit (positive amount) and a credit (negative amount) to the same account leaving a net balance of zero in the account for the invoice.  However, the Aging Schedule would reflect the amount of the actual invoice, thus making the two systems out of balance.  Print the Receivables > Reports > Sales Journal to review the accounts that the invoices have been coded to.  If an invoice has been coded incorrectly, then be sure to change the income account on the billing detail item to prevent any further billings on this item from posting incorrectly. If the invoice has not been paid, then the invoice can be voided and reissued properly, or a general journal can be entered to reclassify the invoice to the proper accounts.  

Likewise, the same theory can be applied to the cash receipt entries.  Print a Cash Receipts report; the debit and credit account numbers on any cash receipt should not be the same.  The cash receipt entry can  be corrected by either reversing the original cash receipt with a negative receipt amount (if the job has an unpaid balance) and then re-entered correctly, or a general journal can be entered to reclassify the receipt to the proper accounts.  

Note: Although reversing the invoice or receipt entries require more postings than a simple general journal entry, more information can be tracked with a cash receipt or an invoice than can be tracked with a general journal entry.