One Vision Service Team

Accounts Receivable Reconciliation Variables

by: Sydney Hayslett, Senior Consultant

 

Have you ever found your Accounts Receivable Aging or Ledger to be out of balance with your Accounts Receivable GL account in Intacct? I’ve found this is a common problem and extremely frustrating for a client. It seems so simple, but there are several variables that come into play when reconciling your Accounts Receivable subledger to your General Ledger. Below I’ve highlighted a few of the reasons this discrepancy might occur and how to stop this from happening in the future.

The first, and simplest reason these could be out of balance is in how a user pulls the subledger reports. To reconcile these reports to the GL it is important to customize the report in a way that includes all customers, all aging periods and is based on the GL Posting Date. The General Ledger Report (or Balance Sheet) must also be run for the same period to compare. If this solved your discrepancy, great news!

If the amounts are still not tying out, we have a few more places to investigate. Are there any journal entries booked directly to the AR account? Are there any line-items that specify this GL account on an Invoice or Bill? What about an Adjustment or Other Receipt? These would affect the GL balance but are not running through the subledger. If this is the case, I would recommend adding a few SmartRules (after cleanup) to keep this from happening in the future. SmartRules are a great way to add a bit of control to how and when entries can be made in Intacct, and what accounts can be used.

In addition to SmartRules there are also some configuration settings that can be reviewed to make sure your Intacct environment is set up to meet your needs. If overpayments are expected, what GL Account is used to record these? An Overpayment will affect the subledger, and the specified account they are configured to use should be included when attempting to reconcile to General Ledger. The account that is used on Overpayments is defined in the configuration settings.

Recording an Advance also affects the subledger and could create a discrepancy in the balance if a different GL account is chosen. In your configuration, you can set up a default account for Advances, but it is important to note that this can be overwritten at the transaction level. SmartRules are also not available on Advances. Using multiple AR accounts to differentiate each type of transaction is helpful, and it works well, but all accounts must be included in the GL account(s) balance to reconcile.

The final item to address when reconciling Accounts Receivable is the issue of timing. If a payment is received prior to the GL Posting date on the invoice there will be a discrepancy. The payment will lower the AR amount in the GL and the AR Ledger, but will not appear on the aging until the GL posting date. At that time both the invoice and payment amount would be present on the aging and it would once again balance to the ledger and GL Account.

By implementing SmartRules, adjusting your configuration, and performing regular reconciliation of the subledger to the AR General Ledger Accounts, you can prevent the variance in the future. The list below summarizes the areas to review:

  • Make sure all Accounts Receivable GL Accounts are included when trying to reconcile.
  • Verify the subledger reports are pulled for the same period, by GL posting date, and include one-time customers.
  • Confirm there are no journal entries posting to the AR account.
  • Confirm there are no line-item entries posting to the AR account on other objects (Invoices, Bills, Adjustments, Other Receipts).
  • Review AR accounts used on Customer Advances and make sure these are included in the AR GL balance to reconcile.
  • Check payment receipt dates to make sure they are not prior to invoice GL Posting dates.

Best of luck in your reconciliation!