Troubleshooting Guide for Out of balance issues

This guide is designed to help you go beyond just finding out out the last date you were in balance.

AP Aging | AR Aging | Advance Bill Accrual | Resources

AP Aging

• When comparing the Aging report to the Balance sheet, be sure to check the box Posted Transactions Only on the Aging report. The Aging report will display all open invoices, including unposted invoices. The Balance Sheet will include only posted invoices.
• Based on the Out of balance date, run both the Aging report and the Balance Sheet for that date. Determine the difference. This is the out of balance amount.
  NOTE: Journal Entries, vendor invoices and payments will affect the Aging and the Balance sheet. Out of balance issues will be caused by an inconsistency in one of these 3 areas.
• Review all invoices and payments.

Issues that can cause an out of balance

1. Review the Today - Accounting for Unposted Transactions and Unapproved Transactions. Review invoices, receipts/payments prior to the out of balance Date. An imbalance can happen if the payment is posted, and the invoice is not.
2. Review the Invoices and receipts/payments. Be sure the posting dates are correct. Review Invoice dates vs. Posting dates. Look for posting dates in the future.
3. Drill down into the Balance sheet for that date. Review for Journal Entries. Journal Entries made to the Accounts Payable account will only affect the balance of the account, but will NOT affect the open invoices in the Aging report. Journal entries should not be entered to fix an out of balance issue.
4. Reviewing the invoices. Be sure the Accounts Payable account is correct. And the line details are NOT set to the Accounts Payable account.

AR Aging

• When comparing the Aging report to the Balance sheet, be sure to check the box Posted Transactions Only on the Aging report. The Aging report will display all open invoices, including unposted invoices. The Balance Sheet will include only posted invoices.
• Based on the Out of balance date, run both the Aging report and the Balance Sheet for that date. Determine the difference. This is the out of balance amount.
  NOTE: Journal Entries, client invoices and receipts will affect the Aging and the Balance sheet. Out of balance issues will be caused by an inconsistency in one of these 3 areas.
• Review all invoices and receipts.

Issues that can cause an out of balance

1. Review the Today - Accounting for Unposted Transactions and Unapproved Transactions. Review invoices, receipts/payments prior to the out of balance Date. An imbalance can happen if the payment is posted and the invoice is not.
2. Review the Invoices and receipts/payments. Be sure the posting dates are correct. Review Invoice dates vs. Posting dates. Look for posting dates in the future.
3. Drill down into the Balance sheet for that date. Review for Journal Entries. Journal Entries made to the Accounts Receivable account will only affect the balance of the account, but will NOT affect the open invoices in the Aging report. Journal entries should not be entered to fix an out of balance issue.
4. Reviewing the invoices. Be sure the Accounts Receivable account is correct. And the line details are NOT set to the Accounts Receivable account.

Revenue Invoice

Advance Bill Accrual  

• When comparing the Aging report - Unapplied Advance Billings to the Advance Bill Accrual account on the Balance sheet, be sure to check the box Posted Transactions Only on the Aging report.  The Aging report will display all Advance Bill Invoices with an unapplied amount and can include unposted advance bill invoices.  The Balance Sheet will include only posted invoices.
• Run both the Aging report - Unapplied Advance Billings and the Balance Sheet.   Verify that the amounts match between the 2 reports.  If the amounts match, then the accounts are balanced.   
  
  
  
• If the amounts from the Balance Sheet and the AR Aging report do not match, then determine the date that they last matched.  To do this, run both reports for a prior date, perhaps last month.   Once you have determined the last time they matched, then the Out of balance date is the next day.  i.e., if the last time the reports matched was 3.1.21, then the date the accounts went out of balance is 3.2.21.  This is the date the accounts were out of balance.   

• Determine the amount of difference between the 2 reports.  This is the out of balance amount.  Note:  Journal Entries, Advance bill invoices and revenue invoices will affect the Aging and the Balance sheet.  Out of balance issues will be caused by an inconsistency in one of these 3 areas. 
  

Based on the date out of balance, review transactions on that date:

• Review for JE’s.  Journal Entries made to the Advance Bill Accrual account will only affect the balance of the account, but will NOT affect the unapplied advance bill invoices in the Aging report.  This can cause an out of balance issue.   
  Advance Bill amounts should not be unapplied through a Journal Entry, but only by applying a revenue invoice.   

• Review all invoices - be sure the posting dates are correct and that all transactions are posted. 
• Review the invoices.
  
  Be sure:

1. 1. The Accounts Receivable account is correct. 
   2. The line level of the invoice is set to the Advance Bill Accrual account
   3. The Advance Bill Invoice box is selected.   

NOTE:  If the Sales GL Account is set to the Advance Bill Accrual account, then the Advance Bill Invoice box must be selected.   If the invoice line is changed to a Sales Income account, instead of the Advance Bill Accrual account, then the Advance Bill Invoice box must not be selected.   They must match.  

   

Resources

AP Aging

AR Aging

Accounting: Today Accounting