Differences Between Receivable and Payable Report Balances

April 21, 2017 by Oliver Sirisonthi

reporting differences

Many users including business owners and bookkeepers compare different reports to cross check balances of accounts in the Chart of Accounts. There are times when you are comparing the balance of the aged receivable and the aged payable reports with the balance of accounts receivable and accounts payable on the Balance Sheet and you see a difference. Don't panic! You are comparing different types of reports and that is the reason why the balances are different.

Importantly, before you can analyse various reports and compare them, you have to know the definition of each. For example, please see below.

The Aged Receivable Report is a periodic report that categorises accounts receivable according to the length of time a sale invoice has been outstanding. It is used as a gauge to determine the financial health of customers. If the Aged Receivable Report demonstrates that receivables are being collected much slower than normal, this is a warning sign that your business may be slowing down or that the company is taking greater credit risk in its sales practices.

By the definition of the Aged Receivable Report, you cannot compare what you see from the Aged Receivable Report with Accounts Receivable balance on the Balance Sheet. Remember, the Balance Sheet shows balances of asset accounts, liability accounts and equity accounts on a specific date. For example, the Balance Sheet of XYZ Company Pty Ltd as at 30 June 2016.

Similar to the Aged Receivable Report, the Aged Payable Report is a periodic report that categorises accounts payable according to the length of time a purchase invoice has been outstanding. The Aged Payable Report tells users the amount of money owed to each vendor and when the amounts are due. Careful attention to this report helps managers determine how much to pay each vendor and also ensures they are paid in a timely manner.

By the definition of the Aged Payable Report, you cannot compare what you see from the Aged Payable Report with the Accounts Payable balance on the Balance Sheet. Remember, the Balance Sheet shows balances of asset accounts, liability accounts and equity accounts on a specific date. For example, the Balance Sheet of XYZ Company Pty Ltd as at 30 June 2016.

Another common source of difference in these reports is that the Aged Receivable and Aged Payable reports give you the option to run the report by type of invoice – for example Tax invoice, Sales order, Adjustment Note and Money In. You can control which are displayed in the reports by clicking on the Cogwheel icon in the controls for the report and using the drop down box to select this.

It is important to understand how to use and how to read each report correctly. Some reports show balances for a period while some reports show balances on a particular point in time. Some reports are management reports while other reports are financial reports. The best person for you to talk to is your accountant as they are the most trained to understand this.

We also have a help note relating to reporting difference on our website. For details, please see https://www.saasu.com/help/reporting-differences/.

If you have any question, please do not hesitate to contact us at service@saasu.com.