Sales look strong because credits have not reached the report
Reconcile gross sales to pending credits and cancellations before assessing apparent turnover growth.
Corporate Recovery Partners
01 / 06
The headline sales number is incomplete
A hypothetical supplier reports a strong month, but several returns and cancelled orders have not reached the accounts report. The owner wonders why collections are lower than the sales figure suggests. Before blaming every customer for slow payment, check whether the reported sales still reflect what the business expects to collect. Timing and reporting corrections can both affect the comparison.
Ask the operational team for authorised returns, accepted cancellations and price adjustments awaiting processing. Compare that list with the ledger and supporting correspondence. Keep proposed credits separate from approved ones. Do not reduce receivables simply because a customer requested a discount, and do not leave an accepted adjustment out of the discussion because the paperwork is delayed.
Business.gov.au's cash-flow guidance focuses on incoming and outgoing money and identifying estimated figures. Build expected receipts from the reconciled account position rather than copying gross sales into the forecast. Ask the accountant how the adjustments should appear in the financial reports. The cash forecast and the sales report serve different purposes, but unexplained differences still need investigation.
In the hypothetical example, an invoiced $20,000 order includes an approved $4,000 return. Assuming no other adjustments, the remaining amount is $16,000. Check whether the forecast still expects $20,000 and whether the customer has received the updated documents. This example isolates the reporting issue; it does not establish the treatment of every return or the timing of a particular refund.
Identify who must confirm each adjustment and who will update the ledger. Retain the supporting evidence and the date the change was made. If the amount is disputed internally, resolve it through the appropriate approval process. Avoid asking collectors to pursue an unreconciled amount while another department has already agreed that part of it should be credited.
Once the records are updated, compare the revised sales and receipt expectations with actual cash. A lower net sales figure may change the questions about performance, but it does not explain every cash shortage. CRP can help review the wider picture. Start with reliable numbers so that collection activity, spending decisions and advice are based on the business's actual position.
