A: |
Generate previous year reports and enter amounts in the average collection period calculator.
When you record invoices, QuickBooks automatically increases the sales account(s) on your profit and loss statement. Accounts receivable is automatically increased on the balance sheet. If you record a cash sale on a sales receipt, QuickBooks automatically increases your sales account(s) on your profit and loss statement. Because you collected the money with the sales receipt, QuickBooks does not use accounts receivable as the offsetting account.
Calculating accounts receivable average collection period in QuickBooks 2000, 2001, 2002, 2003, and 2004:
From the Reports menu, choose Company & Financial.
Choose Balance Sheet Prev Year Comparison.
From the Dates drop down, choose Last Fiscal Year.
Choose Print twice.
From the Reports menu, choose Company & Financial.
Choose Profit & Loss Prev Year Comparison.
From the Dates drop down, choose Last Fiscal Year.
Users of QuickBooks 2000 choose Customize. Users of QuickBooks 2001 and later, choose Modify Report.
Choose Filters.
Choose Transaction Type.
Choose Invoice. (IMPORTANT: This excludes cash received via Sales Receipts.)
Users of QuickBooks 2000 choose OK twice and choose Format. Users of QuickBooks 2001 and later skip to the next step.
Choose Header/Footer.
On the extra footer line, type "Invoices only."
Users of QuickBooks 2000 choose OK twice. Users of QuickBooks 2001 and later choose OK.
Choose Print twice.
Users of QuickBooks 2000, 2001, and 2002 choose Company. In QuickBooks 2003 and 2004 choose Company > Planning & Budgeting.
Choose Decision Tools; then choose Manage Your Receivables.
Choose Track what you're owed.
Choose Calculate collection period.
Scroll to the bottom of the Calculate Average Collection Period page.
Select your credit terms (for example, Net 30).
Enter your Annual sales for the first year (for example, 100000 from the Profit & Loss).
Enter your Current Accounts Receivable Balance (for example, 6000 from the Balance Sheet).
Choose Calculate to see the Average Collection Period (ACP).
Your Target ACP is the Credit Terms you selected above (for instance, 30 days).
Note the calculated number of days in Your Actual ACP (for example, 22 days).
Choose Print twice.
Repeat steps 23 through 28 for the second year.
Tips:
The calculator displays red text based on your collections history. The three messages are illustrated with four examples.
Target 30/Actual 22 (for example, Annual sales $100,000 and Accounts Receivable $6,000):
- "Excellent job! Your credit management habits are resulting in quick payments."
Target 30/Actual 29 (for example, Annual sales $100,000 and Accounts Receivable $8,000):
- "Your actual ACP is close to your target ACP. Keep up the good work!"
Target 30/Actual 32 (for example, Annual sales $100,000 and Accounts Receivable $9,000):
- "Your actual ACP is close to your target ACP. Keep up the good work!"
Target 30/Actual 36 (for example, Annual sales $100,000 and Accounts Receivable $10,000):
- "Some adjustments to your credit management habits may help you get paid faster."
|
