Accounts Receivable

My accounting job so far is pretty fun. It’s a lot less stressful than sales, but it’s not necessarily easy either. I’m currently in charge of accounts receivable (AR), but I’m eventually supposed to be fully trained in accounts payable (AP) as well. Besides my boss who oversees the whole department, there is only one person doing accounts payable (just like I’m the only person doing accounts receivable). Once I’m up to speed, either one of us can cover for the other if necessary.

Learning my basic everyday responsibilities was pretty easy; it took about two days, and those days weren’t all that busy. The real challenge (and the real fun) comes from working on my “AR Aging Report,” which is a list of all our customers who have outstanding invoices and how much they owe. I have to contact the customers with past due invoices and find out why they haven’t paid us yet. Of course, if there are invoices from six months ago (for example), there must be a reason why. The researching and investigating into the stories behind everything is really interesting. I love knowing things, and the research sometimes feels like a puzzle game. If and when a situation is resolved, I get to check it off my list, which is a great feeling.

On a related note, I think that working in sales for a while helps me appreciate and understand the accounting side of business more than if I hadn’t worked in sales. Our accounting department is in its own little world, off in the far corner of the building. If I hadn’t had exposure to other departments first, I would only see numbers going in and out. But since I’ve worked with our products and customers first hand, the numbers, orders, and invoices all have more meaning. The girl who works in AP only does accounting, so I don’t think she’s quite as excited as I am over everything (though she does have an associate’s degree in accounting, so she at least knows what she’s doing, whereas I’m picking it up as I go along).

Anyway. I feel a lot less stress throughout the day, and I find the work is fascinating. I worked late tonight because I was having fun researching for my AR Aging Report. It’s almost like when I was in college and used to do my math homework on Friday nights just because I was so into it (yeah I was a big nerd).

Disclaimer: I don’t think I’m doing real accounting just yet. It’s too early to tell whether I would want to become an accountant professionally. But for now, I’m having fun learning.

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10 Responses to “Accounts Receivable”

  1. Jonathan Says:

    I’m glad you’re enjoying yourself!

    My boss seems to understand that I’m not going to be quite as productive with other things now that I have a lot more stuff to do. So that’s good. I spend a lot of time ordering tax receipts. It’s not very exciting and it’s not much accounting except that I write the checks. I’m still looking forward to a career in music; I just hope this job can keep me on for a few more years until I’m experiencing success in the music business.

    When’s your vacation?

  2. normalboy Says:

    Vacation? I don’t get much time off (the joys of working for a small company). The only time I can think of to take a vacaation is Thanksgiving…

  3. Lisa Says:

    What a refreshing post from you. I don’t remember you EVER describing anything about your sales job as “fun”. I’m glad you’re enjoying yourself. 🙂

  4. lazyprince Says:

    i am taking accounting 101 at uni now so i found this post intriguing.. because all these terms are exactly what we’re learning now! haha

  5. Donna Vestre Says:

    You indicated you are fascinated by researching the aging reports in your new A/R position. Aging reports and DSO (Days Sales Outstanding) calculations are a big part of Accounts Receivable.

    You may be interested in researching the DSO aspect as well. If you don’t understand DSO here’s a brief explanation…

    Days Sales Outstanding (or DSO for short) measures the average length of time it takes your company to collect the money it’s owed. A DSO analysis is a key indicator of how efficient the A/R department is performing. Lowering the DSO will significantly improve cash flow and profitability.

    A quick and easy way to calculate DSO is to total your accounts receivable (the amount that has not been collected yet) then divide that by the total credit sales for the period you’re analyzing. Take that total and multiply it by the number of days in the period being analyzed.

    When you follow-up be certain to keep an eye on your aging trends; because old balances look the same as new balances in a DSO calculation. In the collections industry it’s a well known fact that the further behind past due balances become, the harder they are to collect.

  6. normalboy Says:

    Thanks for the info, Donna! The DSO does sound interesting.

    I understand how difficult it is to collect on very old past due balances. My goal right now is to understand the situations on our oldest outstanding balances and collect as much as I can before they get any older (all while keeping current invoices from aging as long).

    My AR Aging Report actually breaks down the amounts owed into how many days past due: 1-30, 60-90, and over 90. The “over 90” category is certainly misleading, which is why I investigate those first and see what I can accomplish with those first. A great challenge!

  7. Donna Vestre Says:

    Sounds like you’ve got a wrap on the aging process! Good luck to you; I wish you the best in all your endeavors!

  8. Donna Vestre Says:

    Incase you’re interested I wrote book “Accounts Receivable – Your Guide to Getting Paid!” It’s posted to my blog if you want to take a look. Here’s the link; it’s located on the right side of the page under blog roll just click on the title to bring it up.

    http://southcoastrevenue.wordpress.com/

    This is a resource guide designed to empower businesses like yours to experience their most successful in-house collection results. It’s choc-full of letters and forms typically used in the industry.

    Hope you find it useful!

  9. normalboy Says:

    Goodness, your blog is a wealth of information and advice that’s perfect for me! Thank you!

    I already try to do a lot of what you advise, but it’s good to hear it from someone so experienced. It keeps me motivated. 🙂

  10. Donna Vestre Says:

    My pleasure… glad you found it useful!


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