In the 3rd Accounting Clarity for Entrepreneurs tutorial, we covered what to look for on the balance sheet when handling your business’ bookkeeping and accounting. One of the most important and overlooked sections is aged receivables.
Accessing your aged receivables report is where you’ll find a list of all the invoices you’ve created that haven’t been paid. This will show you the total amount of outstanding receivables. Basically, it’s how much money your business is still owed by clients who have yet to pay.
Clients falling into your account receivables can happen for a number of reasons. The client can forget. Their credit card could have failed. You may have created the invoice, but never sent it out. This report can help you track down what happened in each instance and make sure you’re not at fault for your client not paying.
Whatever the reason for the missing payment, this is cash that your business is not receiving and it’s very important. A slight shift in your cash flow can have a detrimental impact on your business and can even cause you to incur fees if your checking account goes negative due to overstating what should be in your account.
Pull this report every month and find out who owes you, how much they how you, and how long it’s been. This is also a way to catch problems with your system if you’re not sending out invoices or there is some other error that is preventing clients from receiving the information they need in order to pay.
You will want to follow up with these people and collect the money you are owed sooner than later, because the longer it goes, the more difficult the conversation and the more expensive this mistake could be for your business.
If you want a system that will easily track all these numbers and present you with the reports, you should definitely consider working with the Kahuna Accounting team of experts. View www.kahunaaccounting.com/growth to learn more.
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