Best Supporting Actor Goes To…
We used to ALWAYS watch the Oscars. We would have watch 90% of the movies that were nominated, and had SERIOUS opinions on who should, and shouldn’t win. One year for Oscar night, we were on a Disney Cruise (pre-kids…yes we are THOSE kind of die-hard Disney peeps), and did the “pick the winners” contest…and yeah, Cael won a Golden Mickey for getting the most right! We love our movies.
I must admit though, over the past 5 years we’ve totally fallen off the wagon. I couldn’t tell you when the Oscars were, and I guarantee I’ve seen maybe 5% of the movies that are nominated. It’s sad.
But I digress…the purpose here is NOT to go down a rabbit hole of despair wondering where the last 5 years went (ahem…Covid. Two businesses. Workaholism). The purpose here is to go past the notoriety of “Best Actor” and look to those supporting actors that make a star shine.
When it comes to the financial world, those supporting actors are the rando reports that your accountant might give you or you might hear about that help to complete the picture on your business’s wellbeing.
Now there’s no doubt – the “stars” of the show are always going to be your Income Statement and Balance Sheet. The Cashflow Statement is technically in there too, but I think it’s a stupid report so I’m ignoring it. But the following are the reports that actually get into the details of what those big hitter reports are saying.
ACCOUNTS PAYABLE AGING
The accounts payable (A/P) report basically shows you what bills you owe, to who, and how overdue they might be. Generally, these reports are organized according to how past due (aka aging) the bill is.
The table below gives you an idea of how these reports look. The first column is the name of the company you owe. The next four are showing different aging periods – current means that the bill isn’t yet due; 1-30 means that the bill is anywhere from one to thirty days overdue; 31-60 means that its 31 to 60 days overdue; 61 to 90 means that its 61 to 90 days overdue; and 90+ means that its over 90 days overdue. Under each of these headers will be the invoice totals that are overdue by those dates.
In this example, there are two open bills from ABC Inc. One is not yet due (current), the other is over two months (60 days) overdue.
ACCOUNTS RECEIVABLE AGING
Accounts Receivable (A/R) report shows you which customers owe you what, and how long overdue their invoice is. This is crazy important for you to watch. Remember cash rules everything so letting your customers take weeks or even months to pay you means you can’t pay YOUR vendors. Any invoice that is outside of the “current” category is past due, and it’s time to start making some calls, sending some emails, and well, maybe breaking some kneecaps, till you collect.
Client B below…they need a visit.
GST REPORT
This one’s probably a bit self-explanatory, but the GST Report tells you what you need to file with CRA for your GST return. It shows you four key numbers you need for your GST filing:
Line 101 – Sales: Total sales for the filing period
Line 103 – GST Collected: Total GST collected on those sales
Line 106 – Input Tax Credits (ITC): Total GST paid out
Line 113 – Balance: the difference between what you collected and what you paid out – this is what you owe to CRA
When you file your GST with CRA, you use this report to enter the numbers and then (here’s the important part) you need to PAY whatever the balance owing is.
TRIAL BALANCE
The Trial Balance is basically the income statement and balance sheet all in one. It’s one of those year-end reports that is handy to hang onto as it gives you everything you need to see that years’ financials. I especially like this one, because sometimes with your main reports or financials, and always on your tax returns, you’ll only get the rounded numbers for each category, i.e. your bank balance will show as $49,365, instead of $49364.73.
For CRA, and most accountants, they don’t really care about those rounding errors. For someone like me…as you can imagine - I can’t deal with that. I need things to be exact; if my bank statement says 49634.73 then that’s what I want to see in my books.
GENERAL LEDGER
This is the last of the supporting reports that you might hear about or see – the general ledger. This is a behemoth of a report. It will show you ever single transaction, in every single category, for every date in the period. It can get stupid-long. But it’s also the be-all-end-all of reports, cause it shows everything. If your accounting system crapped out, this report would show you everything that was entered.
There you go. That’s the supporting cast of financial reports that you might come across. Go play in your accounting system and run these reports to see for yourself.