ERS is a business process between trading partners that conduct commerce without invoices. In an ERS transaction the supplier ships goods based upon an Advance Shipping Notice (ASN) and the purchaser upon receipt confirms the existence of a corresponding purchase order or contract verifies the identity and quantity of the goods and then pays the supplier.

Assets are things which is provide service for long duration it may 3 years 4 years or for long period of time.These items capitalize in our account books and charge depreciation in every year according to these rate it may 20 10 100

Accountants... in big organization there will be a department to maintain AR department.

Time periods you define to age your debit items. Aging buckets are used in the Aging reports to see both current and outstanding debit items. For example you can define an aging bucket that includes all debit items that are 1 to 30 days past due.

Normal table used for this Report is < 30 days 30-60 days 60-90 days 90-180 days and >180 days

A powerful tool to import and validate transaction data from other financial systems and create invoices , debit memos , credit memos and on-account credits

Setup steps:

1. Define the line ordering rules

2. Define the grouping rules - attache the line ordering rules to the grouping rules

An accounts receivable aging is a report that lists unpaid customer invoices and unused credit memos by date ranges. A typical aging report lists invoices in 30-day "buckets," where the left-most column contains all invoices that are 30 days old or less, the next column contains invoices that are 31-60 days old, the next column contains invoices that are 61-90 days old, and the final column contains all older invoices. The report is sorted by customer name, with all invoices for each customer itemized directly below the customer name, usually sorted by either invoice number or invoice date. A sample report follows, though without the individual invoice detail that is usually found in such a report:

Customer Name 

Total A/R 0-30

Days 31-60

Days 61-90

Days 90+

Days

Abercrombie $15,000 $10,000 $5,000 

Bufford Inc. 29,000 20,000 9,000 

Chesterton Co. 83,000 47,000 21,000 12,000 3,000

Denver Brothers 8,000 8,000

Totals $135,000 $57,000 $46,000 $21,000 $11,000

If the report is generated by an accounting software system (which is usually the case), then you can usually reconfigure the report for different date ranges. For example, if your payment terms are net 15 days, then the date range in the left-most column should only be for the first 15 days. This drops 16-day old invoices into the second column, which highlights that they are now overdue for payment.

The report primarily contains invoices, but it may also contain credit memos that have not been used by customers, or which have not yet been matched against an unpaid invoice.

The aging report is the primary tool used by collections personnel to determine which invoices are overdue for payment, and which therefore require them to contact customers. Given its use as a collection tool, the report may be configured to also contain contact information for each customer.

The aging report is also used as a tool for estimating potential bad debts, which are then used to revise the allowance for doubtful accounts. The usual method for doing so is to derive the historical percentage of invoice dollar amounts in each date range that usually become a bad debt, and apply these percentages to the column totals in the most recent aging report.

An additional use of the aging report is by the credit department, which can view the current payment status of any outstanding invoices to see if customer credit limits should be changed. This is not an ideal use of the report, since the credit department should also review invoices that have already been paid in the recent past. Nonetheless, the report does give a good indication of the near-term financial situation of customers.

After 90 days of the due date

A bad debt provision is a reserve that you build up over time against the future recognition of specific accounts receivable as being uncollectible. Thus, if a company has issued invoices for a total of $1 million to its customers in a given month, and has a historical experience of 5% bad debts on its billings, it would be justified in creating a bad debt provision for $50,000 (which is 5% of $1 million).

It is impossible to know the exact amount of bad debts that will occur at some point in the future from the current account receivable, so it is entirely normal to continually readjust the bad debt provision, as you gain a greater understanding of how collectible the accounts receivable really are. These adjustments may lead to future increases or decreases in the bad debt expense. Since these adjustments can be viewed as a means of manipulating a company's reported profits, you should fully document your reasons for making the adjustments.

You would create a bad debt provision with a debit to the bad debt expense account, and a credit to the bad debt provision account. The bad debt provision account is an accounts receivable contra account, which means that it contains a balance that is the reverse of the normal debit balance found in the associated accounts receivable account. Later, when a specific invoice is found to be uncollectible, you create a credit memo in the accounting software for the amount of the invoice that is uncollectible. The credit memo reduces the bad debt provision account with a debit, and reduces the accounts receivable account with a credit. Thus, the initial creation of the bad debt provision creates an expense, while the later reduction of the bad debt provision against the accounts receivable balance is merely a reduction in offsetting accounts on the balance sheet, with no further impact on the income statement.

The reason for a bad debt provision is that, under the matching principle, you should match revenues with related expenses in the same accounting period. Doing so shows the full effect of a billed sale transaction in a single accounting period. If you were to not use a bad debt provision, and instead used the direct write off method to only charge bad debts to expense when you were certain that a specific invoice was not collectible, then the charge to expense might be many months later than the initial revenue recognition associated with the billing. Thus, under the direct write off method, profits will be too high in the period of the billing to the customer, and too low in the later period when you finally charge some portion or all of an invoice to the bad debt expense.