The Accounts Receivable report lists all clients with an overall balance owing as of the selected date.
The Accounts with Credit Balance report lists all clients with an overall negative balance (i.e., credit balance) as of the selected date.
A client’s overall balance is the sum of all invoices, credits, receipts, and refunds in their account. It's the same balance displayed on the client's billing page.
1. Balance Owing vs. a Credit Balance
Clients appear in the Accounts Receivable report if they have a balance owing as of the date selected. Clients appear in the Accounts with Credit Balance report if they have a negative balance (i.e., a credit balance) as of the date selected.
Clients with a Current balance of $0 as of the date selected appear in neither report.
Let's examine a client's billing account to see at what point they'll appear in the Accounts Receivable or the Accounts with Credit Balance reports.
As of 2022-01-30, this client wouldn't appear in either report, as their overall balance is $0.
As of 2022-02-14, this client would appear in the Accounts Receivable report since they have an overall balance of $25.
As of 2022-09-23, this client would appear in the Accounts with Credit Balance report since they have an overall negative balance (i.e., credit) of $75.
2. Overall Account Balance vs Individual Transaction Status
Keep in mind the Current balance in a client's account offers a summary view - it shows a client's overall account balance but doesn't consider whether individual invoices are owing, or individual credits are available.
Below, this client has an unpaid invoice of $100. They also have an available credit of $75. This brings their overall balance owing to $25, which is what would be reflected in the Accounts Receivable report if it were downloaded as of the 2022-02-14.
Other, more detailed reports will not necessarily summarize balances in this way but will instead rely on the status of each transaction individually.
Journal entries are one example – rather than report a balance of $25 for this client, journal entries keep separate records of the outstanding $100 invoice as well as the available $75 credit. When the credit is formally reconciled to the invoice, journal entries will consider both transactions closed and only then result in a $25 balance owing.
The $100 invoice and $75 credit are both unreconciled
The $100 invoice and $75 credit have been reconciled together
☝️ Reconciling the available credit to the open invoice cancels out the Account Deposit and leaves $25 remaining in Accounts Receivable.
3. Frequently Asked Questions
1. Do clients with postdated payments appear in the Accounts Receivable report?
Clients appear in the Accounts Receivable report if they have a Current balance owing as of the date selected. This includes clients with planned payments, even if the Expected balance is $0 (once all the planned payments have occurred).
2. Why does a client appear in my report but when I check their account, their balance is at $0?
Remember, the report is based on clients' overall balances on the selected date. If you choose a date in the past, it's possible their overall balance has changed since then. For an accurate snapshot of account balances, select the current date when generating your report.