My client, Amelia, owns an architecture design business and has hired AccuraBooks to do two things:
- Maintain the bank/credit card reconciliations on a monthly basis.
- Maintain the “back-office” Accounts Receivables.
Amelia desires to always maintain the “front-office” Accounts Receivables by creating the invoices herself and submitting them to her clients, then later on she will apply the payments, via the “front-office” Accounts Receivables software she is utilizing.
Amelia’s handling of Accounts Receivables presented an interesting challenge for AccuraBooks because Amelia really has no desire to maintain anything within the “back-office” bookkeeping software, but yet still wants Accounts Receivables ALSO maintained in the back-office software (just like she does for the front-office software).
Amelia’s reasoning here is that she wants accurate overall financial statements for the company on a monthly basis but does not desire to use this same back-office bookkeeping platform for her daily financial tasks.
So, the solution I came up with was as follows:
- Update all banks/credit cards on a monthly basis and reconcile.
- Leave any customer deposits (that cleared the bank) in an uncategorized account on a temporary basis.
- Log in to Amelia’s front-office Accounts Receivables software and obtain a report that shows all customer payments that she applied to open invoices for the month (the month being reconciled).
- Use this customer payments information to then (back in the back-office software) apply each uncategorized deposit to the correct customer’s profile and invoice that was paid.
Periodically, an Accounts Receivables account reconciliation should also be commenced between the front-office and back-office systems.
Note: the customer invoices within the back-office software do not have the same exact level of detail as the corresponding ones in the front-office Accounts Receivables software because it simply is not needed.
Note: AccuraBooks is a bookkeeping firm only, so please consult with your Certified Public Accountant or with a Certified Auditor for verification and clarification about the contents of this article.