Accounts receivable are an integral part of managing and tracking the money that your company is owed by customers. An accounts receivable schedule is a tool used to document the amounts owed by customers and the due dates of those payments. It is an efficient way to ensure your company gets paid on time and can track any potential issues with payment. It is important for companies to understand the value of having an accounts receivable schedule and use it correctly to avoid any potential financial issues.
Having an accurate accounts receivable schedule is essential for any company as it can help to reduce instances of late payments or missed payments. It can also provide valuable insights into a customer’s payment history, enabling companies to make informed decisions when it comes to extending credit or processing payments. In this blog post, we will discuss the purpose of having an accounts receivable schedule, how to create and maintain such a schedule, and how it can be beneficial to organizations. We will also discuss the potential
CH 7.4 – Preparing a Schedule of Accounts Receivable
Why do businesses use accounts receivable schedules?
The benefits of maintaining an accounts receivable schedule for businesses are numerous. An accounts receivable report can benefit a business in the following ways:
Helps to identify problems with cash flow
For a business to remain viable, working toward a positive cash flow is essential. A company may not have the revenue necessary to cover its operating costs and turn a profit without a positive cash flow. Having a way to monitor customer payments toward outstanding balances is crucial because cash flow is essential to a business’ success. Making an accounts receivable schedule is a great way for financial professionals to keep track of customer payments. This enables them to keep track of how much their clients owe them and establish a regular schedule to pay off any outstanding debts so they can generate the necessary revenue.
Assists with evaluating the effectiveness of a credit policy
For businesses, creating an accounts receivable schedule can be a great way to gauge how well their credit policies are working. For instance, a financial expert can create a schedule that indicates when a customer’s payments are past due and by how many days. If they observe a large number of overdue payments from customers, it might indicate that any late payment policies are ineffective. This enables financial professionals to evaluate and update their existing policies to encourage clients to pay on time. On-time payments from clients can increase cash flow and budget prediction precision.
Helps when determining the right collections approach
A schedule of accounts receivable can also improve the effectiveness of the collection strategy, much like it can assist accountants and financial leaders in evaluating the effectiveness of payment policies. Accounting professionals, for instance, can learn which clients are most likely to pay on time and which may be more likely to have past-due payments by keeping track of customer payments. If a customer who normally pays on time is tardy, it might be appropriate to give them a kinder reminder that they still owe money. The finance department may decide on a suitable collection strategy for clients who frequently make late payments in order to improve payment timing.
Improves the ability to determine credit risks
An accounts receivable report can help you distinguish between customers who pose a credit risk and those who do not. Businesses can assess the relative credit risk for each of their customers by keeping track of which clients pay on time, which clients pay late, and which clients fail to complete their payments. This can assist them in determining whether to continue serving particular clients. Businesses may decide to invest more in customers in order to maintain a good relationship with those who consistently pay on time. Businesses may refuse to provide customers with future services if they don’t make payments on time
What is an accounts receivable schedule?
Managers, accountants, and other business and financial leaders produce an accounts receivable schedule, also known as a schedule of accounts receivable, to keep track of how much money their clients owe them. A schedule of accounts receivable is merely a straightforward list of all the clients who owe a company money. Businesses typically keep an account receivable schedule if they frequently have customers who only pay in part when making purchases from them. For instance, a business that provides customers with store credit cards may monitor unpaid balances using an accounts receivable schedule.
Accounts receivable schedule template
Heres a sample template for an accounts receivable schedule:
Date of invoice, invoice number, customer name, total amount, due date, balance due at time of payment, payment date, payment number, payment date, payment number
How to prepare an accounts receivable schedule
The steps for creating an accounts receivable schedule for your company are as follows:
1. Determine what information your business need to track
When it comes to monitoring customer balances, different businesses might have different requirements. For instance, a local clothing retailer that provides customers with store credit cards may have different tracking needs than a jewelry store where customers frequently make pricey purchases using a credit system. While the clothing retailer may use a more straightforward system since customers may use their credit system less frequently, the jewelry store may need a more thorough tracking system to handle expensive purchases.
You can design the ideal system for you by taking the time to understand the requirements of your company and how to apply a schedule report to your accounting practice. Additionally, also consider the scaling needs of your business. Think about how your accounts receivable schedule system can adapt if you intend to expand your company or alter your credit policy to reflect scaling. You can decide what to include in a schedule of receivable accounts by defining its purpose.
2. Know the parts of an accounts receivable schedule
At least three columns must be present in a basic schedule of accounts receivable. The names of the accounts or customers with outstanding balances, the balance total, and the current balance (or amount the customer still owes) are listed in these columns. You may also include columns for the date of the initial purchase, the dates of any payments made toward the balance, and a section that represents any past-due payments, depending on your credit policy and the requirements of your business. Making a list of the sections you’ll need for your schedule before you create it might be useful.
3. Choose a program in which to build your schedule
You can create your accounts receivable report using a basic or complex piece of software, depending on your needs. As an illustration, you could create a schedule using a common spreadsheet program, or you could use a more feature-rich accounting software for all of your accounting documents. Although using a basic spreadsheet program can be convenient and affordable, it might not have as many features as more feature-rich accounting software. You may decide to add an accounts receivable schedule to your current system if you already use a dedicated accounting program for convenience and accessibility.
4. Use a template or make your schedule manually
Create your schedule in the software or program you’ve selected after making your choice. To make creating your schedule simple and convenient, you can use an existing template. You can access and download free accounts receivable schedule templates from a variety of accounting and spreadsheet programs. Consider creating your own templates by manually entering the sections into the program of your choice if the available templates don’t have all the sections you require for your report. While this approach offers more flexibility than using a pre-existing template, it might take longer.
Accounts receivable schedule example
Here is an illustration of how a company might set up its accounts receivable schedule:
Customers of a neighborhood hardware store that sells appliances like refrigerators and dishwashers have the option of paying for large purchases over time with the help of a payment plan. When customers use this payment method, the company might set up an account for each one of them so they can keep track of their balance and monthly payments. As a result, the hardware store can make sure that every customer makes the correct payment on time and follow up with those who don’t. Heres the schedule the store uses:
Jolene McKenzie paid $3,0003/8/22A1102Tom Smith $8007/15/22$1,2002/15/22$3003/15/22$3003/8/22A1103Invoice date**Invoice number**Customer name**Total amount**Due date**Remaining balance**Payment date**Payment 1**Payment date**Payment 2**1/15/22A1101
Other types of accounting schedules
In addition to an accounts receivable report, you may also use the following other kinds of accounting schedules:
Accounts payable schedule
Similar to an accounts receivable schedule, an accounts payable schedule is used primarily to track vendor balances. An accounts payable schedule is useful for businesses that buy their materials, manufactured goods, or other services from another company, as opposed to an accounts receivable schedule, which is focused on customer payments. Similar to this, if you sell materials to another company, you can create an accounts payable schedule to keep track of their unpaid balance with your business. This enables you or other businesses to keep tabs on the outstanding balances of the clients they work with in order to ensure prompt payment.
Inventory schedule
You can manage both your sellable goods inventory and your manufacturing materials inventory with the aid of an inventory schedule. You can estimate how much it costs to produce and store products by using an inventory schedule. An inventory schedule may list any expenses related to providing the service for businesses that do not sell products. The three kinds of inventory schedules that are used in accounting the most frequently are:
Fixed asset schedule
A company’s fixed assets are listed in detail on a fixed asset schedule. Fixed assets are long-term, tangible assets that a company can’t easily convert to cash, like property and equipment. Financial experts frequently include each asset’s number, gross cost, description, and accumulated depreciation when creating a fixed asset schedule. By maintaining this kind of schedule, business owners can assess changes in the financial value of their current assets as a result of material depreciation. They can use this to determine the market value of their tangible assets and when to replace materials.
FAQ
How is a schedule of accounts receivable prepared?
Most schedules of accounts receivable are designed as aging schedules. Each customer’s name, balance, and a breakdown indicating whether the amounts are current or past due are listed on an aging schedule. Open a spreadsheet program. The simplest way to make an accounts receivable schedule is in a spreadsheet document.
What are schedules in accounts?
A supporting document that offers additional information or proof for the information stated in a primary document is an accounting schedule. Accounting schedules are required in business to provide evidence for the ending balances stated in the general ledger and to provide more information for contracts.
What is the difference between accounts receivable days and an aging schedule?
It displays the total amount of accounts receivable that have been open for a specified amount of time. The accounts receivable that are less than 30 days old, less than 45 days old, or more/less than 90 days old are listed on the aging schedule.
