A customer ledger is a record of all accounts receivable for a company.
A customer ledger is a specific part of a company’s general ledger devoted entirely to the company’s transactions with its customers. Since putting all the various business transactions in one accounting place would be endlessly confusing, companies use separate ledgers dedicated to different aspects of their business. One such subsidiary ledger is the customer ledger, which details all of the accounts receivable that a company has accumulated. This is especially necessary when businesses have credit agreements with their customers, as these agreements often lead to multiple payments for a single item purchased.
Accounting is a necessary task for any company that wants to do business effectively. If a company cannot control all the money that goes in and out, it can cause money to be lost and not recovered. In addition, the monitoring of all the transactions carried out by a company is necessary when paying taxes. Since a ledger can become messy and confusing if all the different transactions are randomly added together, ledgers dedicated to specific lines of business are needed. A customer ledger is one of those specific ledgers.
Certain things must be included in a customer ledger. First of all, all the names and important information about the clients of a specific company must be included. Each client should occupy their own page, which should detail all the different transactions that take place between the company and that client. Transactions include all purchases made, customer returns, and payments made to the business in question.
In many cases, companies may want to keep even more detail in their client books. This can avoid any confusion in the accounting process. For example, if shipping items, the shipping order and any shipping ID numbers must be included. The serial numbers of the items that are purchased must also have a specific place in the ledger. Copies of actual invoices that have been sent to customers are also useful to check for discrepancies.
When companies compiled a customer ledger in the past, it was often done by hand in a ledger section or a separate ledger that, combined with books dedicated to accounts payable, inventory, and other aspects of the business, covered all accounting. Modern technology has made the bookkeeping process much easier, as it is now often done using computer software. This requires accountants to simply enter data related to customers and their purchases. The software then does all the necessary calculations and organizes all the disparate details into a cohesive whole.