How to I clean up my AR?

One of the things that most confuses many businesses is how to record any necessary refunds.  Obviously small businesses love to "Wow!" their clients but returns, refunds, and cancellations will certainly still happen, and when they do they can throw a real wrench in the accounting records if not handled correctly.

The first priority for any business should be to act quickly to address the concern with their client.  Mistakes happen, but the worst thing that can happen would be for the problem to be magnified by a lagging refund.

Therefore, it's very easy to rush to get an invoice cancelled or a refund out the door, and leave the Accounts Receivable records in chaos in the process.

Why is this bad?

Inaccurate AR data has real implications in the calculation of revenues which can result in higher Income Tax or Sales & Use Tax.

Paying your CPA to research and "fix" the problem every year for your tax return is almost certainly resulting in higher bills for preparing your returns AND leaving them less time to provide more valuable advisory services like setting tax strategies and future planning.

How do I know if MY Accounts Receivable data is a mess?

When you run an AR Aging report or a Collections Report, you should immediately feel like each of those client balances are accurate.  Negative amounts are an instant red flag, as are transactions dated significantly in the past.

What can I do?

Determining the appropriate way to correct this problem AND prevent it in the future is highly dependent on the specific processes set up for each business. We can review your reports, advise, and instruct on a way to improve the process going forward.