{"id":2762,"date":"2015-10-15T09:00:41","date_gmt":"2015-10-15T16:00:41","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=2762"},"modified":"2017-10-13T11:10:58","modified_gmt":"2017-10-13T18:10:58","slug":"quickbooks-troubleshooting-for-ar-and-ap","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/quickbooks-troubleshooting-for-ar-and-ap\/","title":{"rendered":"DIY QuickBooks Troubleshooting for A\/R and A\/P"},"content":{"rendered":"

\"Picture<\/a>Small businesses attempting to troubleshoot QuickBooks\u00a0Accounts Receivable (A\/R) and Accounts Payable (A\/P) can often feel like the whole process amounts to monkey business.<\/p>\n

Something way back when didn\u2019t get entered correctly, and now you have to pay an expensive bill to your CPA to figure out where the problem is and how to fix it.<\/p>\n

Except, maybe not.<\/p>\n

In our CPA firm we see many small businesses make the same small handful of bookkeeping errors over and over again. With a little bit of knowledge of what A\/R and A\/P measure\u2014and of how QuickBooks does the accounting for it\u2014you might find out that you can fix a lot of problems with these accounts yourself. We\u2019ve already written a blog post on some general DIY QuickBooks clean up<\/a>, but for this article we\u2019re going to delve further into one method to help you\u00a0clean up A\/R and A\/P specifically.<\/p>\n

Step 1: Make Sure You Know the Basics of A\/R and A\/P<\/h2>\n

We\u2019ve already published two blog posts on this subject already, one on how A\/R works in QuickBooks<\/a>, and one on how A\/P works in QuickBooks<\/a>. Look over these articles and make sure you\u2019re up to speed with how these two accounts work, then move on to Step 2.<\/p>\n

Step 2: See If You Can Spot Any Obvious Errors on the Balance Sheet<\/h2>\n

Here are some procedures you can go through to spot errors in your accounting for A\/R and A\/P, just by looking at the balance sheet:<\/p>\n

First, run a cash basis balance sheet. Do values generate for A\/R and A\/P accounts? If so, something has gone wrong. Remember from our articles on A\/R and A\/P (links in Step 1) that cash basis accounting doesn\u2019t even track A\/R and A\/P. So if values for A\/R and A\/P are showing up at all on QuickBooks\u2019 cash basis balance sheet, a transaction has clearly been mis-entered somewhere.<\/p>\n

And by the way, here\u2019s something to know about wacky A\/R or A\/P values on a\u00a0 cash basis balance sheet: If the balances for A\/R or A\/P show as negative numbers? What\u2019s probably gone wrong here is that you\u2019re receiving customer payments for work you never created an invoice for, and you\u2019re paying bills to your vendors that you never entered a bill to match.<\/p>\n

Note:<\/strong> It\u2019s true, you can<\/em> receive deposits from customers or pre-pay your bills, but those shouldn\u2019t really show up in QuickBooks as negative asset or negative liability accounts, if you\u2019re recording things right. Instead, the customer deposits should be a liability account<\/a>, and the vendor pre-payments should be an asset account<\/a>. Click the links for instructions on how to properly record these types of transactions in QuickBooks.<\/p>\n

Here\u2019s one last bookkeeping error you can potentially spot. Look at A\/R and A\/P again on your accrual basis balance sheet. Do the numbers keep increasing from year to year, by a very large amount? Are they increasing drastically even though the size of your business is about the same from year to year? If A\/R is massively (or even noticeably) increasing from year to year, this could be a sign that you have the opposite problem as described above. You\u2019re creating invoices for your customers, but then not entering the payments as you receive them in QuickBooks.<\/p>\n

Step 3: Isolating Which Customer\/Vendor Accounts have A\/R and A\/P problems<\/h2>\n

If you\u2019ve spotted problems with A\/R and A\/P in Step 2, then your next step is to isolate which customer accounts have the bad transactions, or the missing transactions, that are messing up A\/R (or which vendor accounts have the bad transactions or missing transactions that are messing up A\/P). If you\u2019re comfortable with using Excel PivotTables (here\u2019s a helpful tutorial<\/a> if you\u2019re not, it\u2019s a four-part video series), then finding which accounts have the bad transactions doesn\u2019t have to be too grinding of a task:<\/p>\n

    \n
  1. Run a cash basis balance sheet in QuickBooks<\/li>\n
  2. Double-click on the line for A\/R or A\/P to get a detail report, then export this detail report to Excel<\/li>\n
  3. Fix the report formatting so you can easily convert the report into a PivotTable\n