An aged trial balance (ATB) report contains much of the same data as the accounts receivable (AR) aging report with two primary differences: what the data intends to accomplish and how timing affects what data is displayed. One report isn’t better than the other; it is a matter of the information you need and your goals for the report.
The “trial” in a standard trial balance report refers to a comparison of debits versus credits. A trial balance of the entire general ledger of the company shows activity on each side of the double-entry accounting system. An aged trial balance is different, it displays what is in the account as of a certain date and sorted by age categories.
With AR, your total ledger balance should equal the balances shown on the AR aging report for a given period. When there is a discrepancy, it means something went astray in the posting of debits and credits, such as:
- an entry was miscoded into the wrong account,
- a credit didn't properly balance a debit to the appropriate offset account, and/or
- there was a data-entry error.
AR trial balances and other reports may help you locate and fix the discrepancy.
When Do You Run an AR Trial Balance vs. an Aging Report?
An accounts receivable aging report is typically run after all transactions for the month post to the general ledger. Some firms run these on a weekly basis, depending on the nature of their receivables and whether their payment terms are net 15 versus net 30, and so forth.
The AR aging report is part of the standard monthly financial reporting package for management and executive review. In contrast, the AR trial balance report is usually run ad hoc for reconciliation purposes or when the need arises to limit or expand the date range of receivables more flexibly than you can with AR aging reports.
Who Uses an ATB vs. an AR Aging Report?
AR aging reports can be disseminated among various stakeholders to shed light on accounts that are habitually delinquent, clients that may need finessing, or credit- and client-screening policies that may not be discerning enough.
In addition to the finance department, AR aging reports may go to sales teams and others who can affect the collectability of invoices. A trial balance, however, is used internally by the accounting department and isn’t circulated. It intends to reconcile debits versus credits in the accounting system.
One option versus another may be better to run depending on the user viewing the report. Those in the C-suite may want to view only high-level reporting showing aging by bucket with little (or no) client detail. Sales and collections will want to see more detailed reports.
What’s the Difference Between an ATB and an AR Aging Report?
The accounts receivable aging report and the aged trial balance can be set to display high-level numbers or more granular information. They can also display a summary by customer or details of outstanding invoices by customer. The data displays in time buckets of 0-30 days, 31-60 days, and so on.
One difference is the timing of reports. The AR aging report displays information as of the date you run the report and shows what is currently outstanding. It’s most often run at the end of the month, but can be at the end of a week if you want to run it more often. .
The trial balance can be for a specific date range. For instance, if it’s June 2018 and you need to reconcile invoices for December 2017, you can set the aged trial balance to cover the appropriate period to see a snapshot of outstanding receivables for a specific date or date range.
Most finance departments rely on accounts receivable aging reports and reserve AR trial balance reports for special needs and reconciliations. Whichever you prefer to use, automation is always preferable to manually created reports.