For many businesses, accounts receivable (AR) are more than just a line item on the balance sheet. This account provides a key indicator of potential cash flow, customer relationships and overall financial health. So proactive AR management is critical. The AR aging report has long been a cornerstone of expediting collections and reducing credit risk, but it’s taken on greater significance with the implementation of new accounting rules for recognizing credit losses.

Digging deeper into receivables

The AR aging report provides a structured breakdown of all outstanding customer invoices. Rather than simply listing balances owed, it categorizes AR based on how long each invoice has remained unpaid. The following time-based “aging buckets” are typically used:

• 0 to 30 days (current),
• 31 to 60 days,
• 61 to 90 days, and
• Over 90 days.

This breakdown helps management evaluate trends in customer payment behavior, identify chronic late payers, and assess how credit policies are performing. The information can be used to prioritize collection efforts and determine when receivables should be written off. Management also might use it to modify overall credit practices (for instance, offering early-bird discounts or electronic payment methods to encourage faster payments) or tighten credit policies for certain slow-paying accounts.

Optimizing cash flows

By revealing how long invoices have been unpaid and identifying customer payment trends, the AR aging report helps businesses forecast future cash receipts. This can help management more accurately:

• Budget operating expenses,
• Determine the need for short-term borrowing or credit lines, and
• Plan investments or capital expenditures.

For instance, if a business sees that 40% of its receivables are older than 60 days, management can anticipate cash shortages in the next cycle and act preemptively. They may decide to delay certain discretionary expenditures or reevaluate vendor payment terms to maintain liquidity.

Using aging buckets to estimate write-offs

Starting in 2023, private entities that follow U.S. Generally Accepted Accounting Principles (GAAP) are required to implement new accounting rules for reporting credit losses on financial assets, including trade receivables. (The rules went into effect for most public companies in 2021.) The updated guidance requires companies to estimate an allowance for credit losses based on current expected credit losses (CECL) at each reporting date. The net amount reported on the balance sheet equals the amount expected to be collected. The CECL model essentially requires companies to estimate write-offs sooner than in the past.

Under prior accounting rules, a credit loss wasn’t recognized until it was probable the loss had been incurred, regardless of whether an expectation of credit loss existed beforehand. Under the CECL model, a loss allowance must be estimated based on historical information, current conditions, and reasonable and supportable forecasts. This estimate is often derived using historical default rates from aging buckets and adjusted for current and forecasted economic conditions. AR aging reports provide the historical and current data necessary to project the probability of default for various customer segments and invoice-age groups.

Estimated credit losses are recorded on the income statement as bad debt expense, directly reducing net income. Financial statement footnotes may also include detailed aging data and descriptions of how the loss estimate was developed, particularly if receivables represent a significant portion of the company’s assets.

It’s important to note that the Financial Accounting Standards Board is currently working on proposed guidance that, if approved, would allow private entities to use simpler assumptions to estimate credit losses on short-term receivables. However, regardless of whether the proposed simplification measures are approved, the AR aging report remains an essential tool. It helps quantify expected losses with or without complex forecasting.

A strategic management tool

QuickBooks® and many other accounting software platforms can generate real-time, customizable AR aging reports that integrate with customer relationship management systems for seamless tracking and follow-up.

If you’re unsure whether your current processes are CECL-compliant or you need assistance leveraging aging data to strengthen collections, credit policies, and budgeting decisions, we’re here to help. Contact us to maximize the potential of your receivables data.

With new tariff structures looming and global trade relationships in flux, businesses face rising uncertainty in supply chain costs and inventory planning. As countries iron out the details of future U.S. trade agreements, companies must proactively manage their inventory to avoid margin erosion and supply disruptions. Here are six smart strategies to help safeguard your operations.

1. Analyze your supply chain

Start by identifying where your inventory items originate — not just your direct suppliers, but the true sources of raw materials and components. Many small businesses purchase through intermediaries, such as distributors or service centers, making it difficult to spot exposure to higher tariff zones. Also, review tariff codes for your imports to ensure correct classification and identify potential opportunities for reclassification or exemptions.

After determining where items originate, evaluate their criticality, cost, and lead times. This assessment reveals your level of risk and highlights where disruption would have the greatest financial impact. A detailed supply chain map gives you the data needed to make informed decisions, whether diversifying suppliers or adjusting stock levels for sensitive items.

2. Identify alternative vendors

If tariffs threaten your current sourcing strategy, explore alternative suppliers in different regions or even domestically. But don’t make changes solely based on cost; ensure new suppliers meet your standards for quality, reliability, and speed.

If you rely on one or two suppliers for critical items, identify a mix of potential suppliers in different geographical regions. Having multiple partners lined up provides flexibility if one region becomes economically unfavorable. For example, a contractor who relies on imported electrical components could benefit from developing relationships with U.S.-based distributors, even at a premium, to ensure business continuity. This dual-sourcing approach may add resilience and open the door to competitive pricing negotiations.

3. Strengthen supplier relationships

Solid supplier partnerships are more valuable than ever. Transparent communication helps you stay ahead of inventory delays or pricing shifts. Suppliers may also provide early warnings on tariff impacts or offer better terms to long-standing customers. Building trust now can give you access to more favorable pricing, priority fulfillment, or flexibility in challenging times.

Don’t just talk business — build strategic alliances. Offer forecasts, discuss contract extensions, and explore vendor-managed inventory models for shared efficiency gains.

4. Reevaluate purchase timing and inventory volume

Keep close tabs on your supply chain partners. If tariff increases appear imminent, consider purchasing key inventory before they take effect. While this ties up working capital, strategic stockpiling can save costs and protect against supply disruptions. Prioritize high-impact items with long lead times or few substitutes. However, consider increased storage costs and potential obsolescence when expanding inventory levels.

Another option is locking in long-term pricing contracts. This can be especially effective if you negotiate fixed rates or volume-based discounts.

5. Review pricing and cost control

With uncertainty swirling, many businesses hesitate to raise prices in the hope that the “trade wars” will cool off soon. But absorbing higher input costs indefinitely can strain your cash flow. Monitor competitor pricing strategies and be transparent with your customers if adjustments are needed. Consider tiered pricing models, pass-through clauses, or surcharges tied directly to tariff fluctuations to maintain trust.

Simultaneously, revisit your internal cost structure to help preserve margins. This could include streamlining packaging, reducing waste, optimizing warehouse layouts, and renegotiating freight contracts.

6. Embrace automation for resilience

Bringing more production or fulfillment in-house may insulate you from global risks, but labor shortages and costs are valid concerns. Automation and AI tools can offer a competitive edge by increasing output without a proportional rise in headcount. Even smaller-scale investments, such as automated inventory tracking or demand forecasting software, can reduce manual errors and improve agility.

Avoid knee-jerk reactions

Whatever course you take, ensure it’s guided by data and long-term business goals, not impulse. We can help you create financial models that forecast the impacts of different scenarios and guide you toward cost-effective, sustainable decisions. Contact us for more information.

Big changes are happening! With our new brand and evolving values, we’ve outgrown our current space and found a location that truly reflects who we are.

New Address: 655 Metro Place South, Suite 450, Dublin, OH 43017

Don’t worry—we’re still conveniently located just a short drive from our Worthington location, and you’ll continue to receive the same great service you know and love. This move allows us to better support our team and enhance your experience.

Stay tuned for updates as we prepare for this exciting transition!

Understanding your business’s financial health is essential for long-term success. QuickBooks® offers a powerful reporting tool suite that can provide critical insights to support decision-making and help you comply with accounting and tax rules.

Accrual-basis QuickBooks users should get in the habit of reviewing the following five reports monthly to keep their finances in check and be proactive instead of reactive when challenges arise. Note: Before running reports, confirm that QuickBooks is set to display accrual-basis (not cash-basis) results.

1. The profit and loss statement: Scoring your monthly performance

The profit and loss statement summarizes your business’s revenue and expenses over a given period. Also known as the income statement, it serves as a “scorecard” of whether your business is profitable and how income compares to spending.

This report can also highlight trends. Compare the current month to prior months or the same period last year to evaluate performance over time. Monthly reviews allow you to track whether revenue is increasing, expenses are under control, and margins are healthy.

QuickBooks allows you to break down this report by business segment, location, or class. A customized breakdown shows which parts of your business drive profitability — and those that may be underperforming.

2. The balance sheet: Taking a snapshot of financial health

The balance sheet shows your financial position at a specific point. It lists assets, liabilities, and equity. This helps you understand what your business owns versus what it owes. Compare your current balance sheet with previous periods to identify any material changes. Reviewing this report monthly helps evaluate whether your business is:

• Maintaining adequate working capital,
• Investing in long-term assets, and
• Managing debt responsibly.

It can also reveal imbalances — such as unpaid liabilities or aging inventory — that may need management’s attention. With QuickBooks, you can filter or group the report by class or department to gain deeper insights into how different parts of your business affect your overall financial standing.

3. Accounts receivable aging summary: Staying on top of customer payments

Unpaid invoices can severely impact cash flow. The accounts receivable aging summary categorizes outstanding customer balances by how long the invoices have been due. QuickBooks uses the due date fields from recorded invoices to group receivables into 30-, 60-, 90- and 90-plus-day buckets. Reviewing this report each month allows you to quickly identify which customers are behind on payments and how much is at risk. Timely follow-up on overdue invoices can significantly improve cash inflows and reduce bad debt write-offs.

QuickBooks users with multiple customer types or sales channels can customize this report by customer type, region or sales rep. This helps pinpoint trends in slow-paying clients or potential areas for process improvement in billing or collections.

4. Accounts payable aging summary: Managing cash outflows

The accounts payable aging summary shows outstanding bills and categorizes them based on the due date field in QuickBooks. This report helps ensure that bills are paid on time, avoiding late fees and protecting vendor relationships. Reviewing payables monthly also helps manage cash flow more strategically. For instance, you can defer some payments without penalty, while others may need to be prioritized to maintain supply chains or essential services.

QuickBooks users with complex supply chains can tailor this report to show spending by vendor category. This pinpoints where your money is going and whether there may be opportunities to consolidate or renegotiate terms.

5. Statement of cash flows: Following the money

The statement of cash flows tracks how cash moves in and out of your business. Cash flows are reported under the following categories:

• Operating activities,
• Investing activities, and
• Financing activities.

A profitable business may still struggle to pay bills if its cash flow is weak. That’s why it’s so important to review this report regularly. It helps you understand whether your operations generate enough cash to sustain the business and whether large outflows, such as equipment purchases or debt repayments, are straining liquidity.

QuickBooks lets you view this report over time. For instance, viewing it on a month-by-month or rolling 12-month basis can reveal seasonal trends and help you anticipate upcoming cash needs. This is especially useful when making strategic plans for capital investments, hiring, and financing.

Beyond standard reports: Customizing for deeper insights

While the standard versions of these five reports are helpful, tailoring them to your specific needs can yield even more valuable insights. With just a few clicks, you can filter reports by class, customer, vendor, or location. You can also add or remove columns, sort data differently, or apply custom date ranges. These options make it easier to understand business unit performance.

To save time and ensure consistency in your review process, QuickBooks allows you to “memorize” customized reports and schedule them to be automatically generated and emailed to your management team each month. You can also use the management reports feature to bundle multiple reports into a branded, presentation-ready package. This can facilitate internal meetings and discussions with lenders or investors.

Small habits lead to big insights

Reviewing monthly financial reports doesn’t have to be overwhelming. After you make journal entries in QuickBooks, the software handles most of the legwork. However, if you’re unsure how to customize your reports or need help interpreting them, contact us. We can help you leverage QuickBooks to its fullest potential.

Financial losses from corruption are on the rise, according to “Occupational Fraud 2024: A Report to the Nations,” published by the Association of Certified Fraud Examiners (ACFE). Nearly half the cases in the latest version of this report involved corruption. Even more alarming is the finding that the median loss for corruption cases grew by 33%, from $150,000 in 2022 to $200,000 in 2024.

Spotlight on corruption

The ACFE divides fraud schemes into three primary categories: 1) asset misappropriation (theft), 2) financial misstatement, and 3) corruption. Its 2024 report defines corruption as “a scheme in which an employee misuses their influence in a business transaction in a way that violates their duty to the employer in order to gain a direct or indirect benefit.” Examples include:

• Conflicts of interest, such as purchasing and sales schemes,
• Bribery, including invoice kickbacks and bid rigging,
• Illegal gratuities, and
• Economic extortion.

Which industries and departments are at high risk for corruption? The ACFE report found that corruption was the most prevalent scheme across all industry sectors — and in all departments where fraud perpetrators commonly work.

Anti-corruption measures

Given corruption’s universal threat, consider these four steps to fortify your organization’s defenses:

1. Strengthen internal controls.

While physical security measures — such as locks, passwords, and video cameras — can thwart asset theft, other control procedures may reduce opportunities for workers to engage in corrupt behaviors. For instance, formal vendor management policies can be particularly effective against kickbacks. Key elements to cover are:

• A formal vetting process to ensure only legitimate vendors are approved,
• Competitive bidding requirements to prevent favoritism and inflated pricing,
• Conflict-of-interest policies that require employees to disclose personal relationships with vendors, and• Payment controls that match invoices with purchase orders and delivery receipts to confirm the legitimacy of transactions before they’re processed.

Other examples of cost-effective internal controls that can help counter corruption schemes are job segregation and rotation, dual authorizations for large payments, mandatory time-off policies, employee training programs, and written job descriptions and ethics policies.

2. Leverage automated accounting software.

Modern accounting software can be a powerful tool against corporate corruption. These systems track financial transactions in real time, providing visibility and control over where money is going — and whether it’s going where it should. Automation reduces human error and minimizes opportunities for manipulation by ensuring consistent data entry, processing, and reporting. Many platforms offer built-in alerts for unusual activity, such as duplicate invoices or unauthorized vendor payments.

For example, expense tracking systems can automatically categorize spending patterns and flag anomalies, such as out-of-policy purchases, high-dollar transactions just below approval thresholds, or spending spikes in specific departments. AI-driven fraud detection tools go a step further by learning from historical data to identify subtle patterns of suspicious behavior that traditional systems might miss, such as repeated transactions just under approval limits (a red flag for invoice splitting), frequent payments to new or inactive vendors, round-dollar transactions, and transactions outside normal business hours.

Many accounting systems integrate with enterprise resource planning software. This gives managers a holistic view of operations and allows cross-referencing between purchasing, payroll, and inventory systems. Integration helps uncover conflicts of interest, fraudulent billing, and other corporate corruption schemes that might otherwise go undetected when data is siloed. Additionally, some platforms allow for role-based access controls and automated audit trails, ensuring only authorized personnel can initiate, approve, or modify transactions, and that any changes are fully documented.

3. Proactively manage financial data and employee activity.

Managers should adopt a hands-on approach to detecting and preventing corporate corruption practices. This includes regularly reviewing financial reports generated by your accounting systems for inconsistencies and monitoring high-risk employees with access to company funds and accounting records.

All employees must follow strict approval and documentation procedures to prevent unauthorized transactions. Detailed invoices ensure clarity on the goods and services provided. Business justifications for significant expenses add an extra layer of accountability. Limiting cash transactions in favor of electronic payments maintains transaction records and enhances financial transparency.

4. Audit your financials.

External audits provide independent reviews of financial transactions, helping managers identify and address irregularities. You don’t necessarily have to wait until year-end for an external audit, however. Consider conducting periodic surprise audits throughout the year as an added measure of protection — or hiring a forensic accounting specialist to investigate suspicious activity.

 

Let’s assess your risks

When did your organization last update its systems against the mounting risk of corporate corruption? Too often, business owners and managers assume that corruption only happens in foreign countries or large multinational companies. But the recent ACFE report provides a sobering reminder that corruption can affect any company, regardless of size, location, or industry.

Contact us to help ensure your organization is protected against these schemes. We can assess vulnerabilities, implement robust controls to strengthen your accounting systems, and investigate anomalies or suspicions of corrupt behavior.