What you are owed, and what you owe

The two words

• Sundry debtors — customers who owe you. An asset: money you expect to receive.
• Sundry creditors — suppliers you owe. A liability.

Both are the totals of the party ledgers. Nothing is entered into them directly; they are what the bills and the receipts add up to.

A balance is not enough to collect on

"Sharma Traders — ₹84,000" starts an argument and settles nothing. What collects money is bill-wise detail: which invoices make up the ₹84,000, dated when, and which of them he has already paid against.

Which is why a receipt should be recorded against the bills it settles, not merely against the party. Otherwise, six months later, neither of you can say which of eleven invoices the three payments covered, and the difference becomes a negotiation instead of a fact.

Ageing

The same outstanding, split by how old it is — current, 30, 60, 90 and beyond. It changes what you do:

• Recent balances are normal trade. Nothing to do.
• Money past your agreed terms is a follow-up, and follow-up works far better at 45 days than at 120.
• Anything very old is usually either disputed or not coming. Both need a decision rather than another reminder.

Ageing is also the honest way to look at your own creditors: which suppliers you are quietly funding the shop with, and how long that can go on before somebody stops supplying.

The habits that keep it clean

• One ledger per party. Two spellings of the same supplier split a balance in half and both halves are wrong.
• Record the receipt the day it arrives, even a part payment. Money sitting in somebody's pocket is a dispute waiting to happen.
• Confirm balances periodically with anyone who owes you a large amount. A mismatch found this quarter is a keying error; found in three years it is a quarrel.
• A return becomes a credit note, never an edit to the original bill. See credit and debit notes.

Outstanding, party ledgers, ageing and payment reminders are in every edition of Aned Book including Basic — they are a billing question, not an accounting one. What Silver adds is the rest of the ledgers around them.

This page explains how book-keeping works so a shopkeeper can follow what an accountant is asking for. It is not accounting or tax advice — talk to your accountant before you rely on it for a filing or a return.

Questions

What is bill-wise outstanding?

The party’s balance broken into the individual invoices that make it up, with the receipts applied against them. It is what turns a disputed total into a checkable list.

What is a good ageing profile for a shop?

There is no universal number — it depends on the terms your trade works on. What matters is that the shape is stable and that little of it is drifting past your own agreed terms.

Do I need Silver to see what customers owe me?

No. Outstanding, party ledgers and reminders are in Basic. Silver adds the full accounting ledgers around them.