AR & AP Reconciliation
Overview
Accounting Seed provides both current and historic aging reports for
Accounts Receivable (Billings) and Accounts Payable to manage current unpaid assets and
liabilities as well as see the status of open accounts receivables and payables at the end of a
specific accounting period. This knowledge article covers the reconciliation of historic agings to
the general ledger.
Definitions of Current vs. Historical Agings
Current Agings
Are used to report what Accounts Receivable (Unpaid Billings) or Accounts Payable (Unpaid
Vendor Invoices) have not been paid as of this very moment. These reports are used for
collections of billings or selection of vendor invoices to pay.
Historical Agings
Are used to report what Accounts Receivable (Unpaid Billings) or Accounts Payable (Unpaid
Vendor Invoices) at the end of a specific accounting period. These reports are used by auditors
and accounts ensure the trial balance has an accurate value for accounts receivable or accounts
payable at month end. They are a detailed listing of what makes up the balance at the end of an
accounting period.
Enabling Historical Agings
Enable via Accounting Settings
To run the Historical Aging reports you need to enable Period Sensitive Agings once for your
organization on the Accounting Settings Tab. Note: upon install this setting is not enabled. To
enable this feature navigate to the Accounting Settings tab and check the "Enable Billing Period
Sensitive Aging" and "Enable AP Period Sensitive Aging" checkboxes.
How Historical Aging Reports Work:
During the Accounting Period Close routine Accounting Seed creates history records for each
Billing (Billing Aging History) and each Account Payable (AP Aging History) with a non-zero
balance. This History record contains the balance and the age at the last day of the Accounting
Period. Historical Aging Reports are run from the Billing/AP Aging History objects filtering on a
specific accounting period. Once a Billing/AP record reaches a zero balance the routine creates
one more history record for the first Accounting Period that the Billing/AP has a zero balance.
How to Run Aging Reports
Current Aging Reports
To run a current accounts receivable aging navigate to the reports tab. Find the
"Accounting Seed Billing and Cash Receipts" Folder. Select the "Billing Aging by Customer-
Current" report.
To run a current accounts payable aging navigate to the reports tab. Find the "Accounting
Seed AP and Cash Disbursements" folder. Select the "Accounts Payable Aging by Payee-
Current" report.
Historical Aging Reports
To run a historical accounts receivable aging navigate to the reports tab. Find the
"Accounting Seed Billing and Cash Receipts" folder. Select the "Billing Aging by Customer-
Historic" report. You will need to update the Accounting Period Filter to focus on the specific
period you would like to report on.
To run a current accounts payable aging navigate to the reports tab. Find the "Accounting
Seed AP and Cash Disbursements" folder. Select the "Accounts Payable Aging by Payee-
Historic" report. You will need to update the Accounting Period Filter to focus on the specific
period you would like to report on.
Please note that many customers often link historical aging reports to an Accounting Period so
they do not need to change the filter each time they would like to run the report for a new period.
Prepaid Accounts Payable: A Known Reconciliation Item
Please note the accounting for Accounts Receivable has a slightly different architecture then the
accounting for Accounts Payable in Accounting Seed.
Accounts Receivable Architecture
There are three sources for creating debits and credits in the AR control account. These three
transaction types are:
Billing
Cash Receipt
Cash Application (Billing Cash Receipt)
This architecture allows for there never to be any known reconciling items since all 3
transactions are tied to an accounting period.
Accounts Payable Architecture
There are only two sources for the creation of Debits and Credits in the AP control account:
Accounts Payable
Cash Disbursements
As a result, if a cash disbursement is created with the credit GL Account set as the Accounts
Payable control account with an accounting period earlier then its related Account Payable it will
be a reconciling item. This is because the cash disbursement will be decreasing the balance on
Accounts Payable without the original accounts payable transaction recorded. This will be a
reconciling item until the period on the Accounts payable and the period on the cash
disbursement are both less than or equal to the current period you are running the report for. The
reconciliation item is, in essence, a timing difference.
To identify prepaid cash disbursements create a report with the following parameters:
Report Type:
Cash Disbursements AP disbursements.
Report Filters:
Cash Disbursement period Less than or equal to the current period AND AP Period on the AP
Disbursement record greater than the current period.
A General Approach to Reconciliation
If the total of your historic accounts aging does not tie to the trial balance you need to go back to
the last accounting period where the aging was in balance. The next Accounting Period is the one
you need to focus on resolving. After this accounting period is reconciled you can go on to the
next one. Please note that prepaid accounts payable are a known reconciling item. Please see the
section above detailing this.
1. Find the last accounting period in balance.
By finding the last accounting period in balance you can identify accounting period where the
first occurred and correct it. Reconcile the next accounting period before you move
on to subsequent accounting periods.
2. Check that there are no undesired entries to AR or AP control account.
The number one reconciliation issue is that a transaction from another source has posted to
the control account by accident. Run a transaction report for the AR or AP control account for
the period in question. All the transactions should come from Billing, Cash receipts and
Billing Cash Receipts for AR and Accounts Payable and Cash Disbursements for AP. Make
sure there are no undesired transactions coming from Journal entries, scheduled revenue and
expense, Time Cards, or inventory movements.
3. Create a transaction summary by account to compare to the aging.
The easiest way to reconcile the aging to the control account is to create a transaction report
for the AR or AP control account and group it by Account. The accounting period filter
should be all accounting periods less than or equal to the current period. You will then be able
to compare the total of the transaction report to the aging report for each customer or vendor.
The difference will typically be flushed out.
Other Possible Reconciliation Issues
Other possible reasons for reconciliation are as follows:
Potential Issue 1: There are no Billing Aging Records or Accounts Payable Aging records and
the accounting period is closed.
Resolution 1: Historic Agings may not be enabled. Navigate to Accounting Settings and enable
the agings. Open and re-close Accounting periods as appropriate.
Potential Issue 2: It seems like there are missing Billing Aging Records or Accounts Payable
aging records and the accounting period is closed.
Resolution 2: Historic agings may have been accidentally deleted. Open any accounting periods
in question and close them again. This action will re-generate the historical aging records. It is
suggested you fix your security settings to prevent this from happening again.
