Understanding the Differences
When it comes to managing your business finances, it's important to have a clear understanding of your sales and payments. These two reports provide valuable insights into the financial health of your business, but it's important to note that they are not the same.
In this article, we'll explain the differences between the sales report and the payments report, and why they may not always match up.
Sales Report
The sales report is a summary of all the charges billed for a specific period. This report includes all sales, whether they have been paid or not. It's important to note that the sales report is based on the date the sale was made, not the date the payment was received necessarily. This means that a sale made today will show up on today's sales report, even if the payment is received at a later date.
Payments Report
The payments report, on the other hand, is a summary of all payments received for a specific period. This report only includes payments that have been received, regardless of when the sale was made. This means that a payment received today for a sale made last week will show up on today's payments report, but the same payment will reflect on last week's sales report.
Differences Between the Two Reports
Now that we understand the basics of the sales report and the payments report, let's take a closer look at the differences between the two.
Firstly, the sales report includes all sales, while the payments report only includes payments that have been received. This means that the total amount shown on the sales report may be higher than the total amount shown on the payments report.
Secondly, the sales report is based on the date the sale was made, while the payments report is based on the date the payment was received. This means that the two reports may not always match up, especially if there is a delay in receiving payments.
Lastly, it's important to note that sales and payments do not always coincide. This means that a payment received today for a sale made last week will show up on today's payments report and last week's sales report. This results in differences between the two reports.
In the example below, we see that the sales report for 11 October, shows the full Total for the sale; however, the amount Paid was received on 14 October.
If the same report was run on 11 October, this payment would not have been available.
Thus, the sales report is best used to determine the sales totals for a period, and any payments reflected may be from a different period.
The payments listed on the sales report are dynamic.
The Paid & Due columns are changing and updating as payments are received for these sales which can originate from one or many payments of different periods.
Looking at the payments report from 11 to 14 October, we see that the payment date is reflected on 14 October.
Business Implications
What does it mean if the Total Sales for a period is higher or lower than the Total Payments for the same period?
If your Total Sales is higher than your Total Payments...
Your Total Outstanding Debt is increasing!
If your Total Sales is lower than your Total Payments...
Your Total Outstanding Debt is reducing!