Account Balance

An account balance is the total amount of money in a bank account or general ledger account. Accountants or banks usually calculate this by taking the sum of all deposits and subtracting all withdrawals. Note that this is sometimes treated differently from the account’s running balance, which is a continuously updated tally of all transactions that have occurred in an account during the current statement period.

What Is Account Balance Accounting?

It refers to the practice of tracking account balances over time. Accountants can do this for individual accounts or for groups of accounts, such as all the accounts in a company’s bookkeeping system. The balance is usually either expressed as a positive or negative. A positive balance implies an adequate amount of cash compared to current expenses. In contrast, a negative balance is a symptom of overspending, low revenue, or both.

By keeping track of account balances, businesses can better understand their financial positions. Here are some additional benefits and uses:

  • Detecting unauthorized transactions
  • Determining how much credit the business can extend
  • Forecasting future cash flow needs
  • Reconciling accounts
  • Identifying errors in bookkeeping entries

What Are Some Types of General Ledger Accounts With Balances?

All general ledger accounts carry a balance. Sometimes, these balances represent hard numbers or transactions. Other times, they represent estimates, such as for bad debt or asset depreciation. Consider the following examples:

  • Cash
  • Accounts receivable
  • Inventory
  • Prepaid expenses
  • Unearned revenue
  • Wages payable
  • Sales tax payable

How Can You Complete an Account Balance Check?

When you want to know the current balance in a bank account, you can use mobile apps or websites to log in. The bank’s system will display the current total balance and you can review monthly statements. You might also have the option to request a statement for a specialized period from your bank, such as quarterly.

When it comes to an accounts payable or accounts receivable balance sheet, accountants do a bit more work. They need to go through the individual transactions and calculate the balance for each one. Accountants can do this manually or they can use software to automate the process.

No matter how you calculate it, the balance is always a snapshot in time of the money in an account. This can change weekly or even hourly. Accountants must keep this in mind when trying to make financial decisions based on that balance.

Why Is Balance Forecasting So Important?

Balance sheet forecasting is a technique used to predict future account balances. Financial professionals can use historical data or trends in the data. Forecasting can help businesses plan for upcoming expenses and make sure they have enough money in their accounts to meet these obligations.

The finance team does more than just manage the current financial affairs of a business. It must also be in a good position to make good predictions of the company’s cash position, which comes back to the balances in its accounts. Without accurate account balances, businesses would be flying blind when it comes to their finances. Forecasting helps businesses accomplish the following:

  • Avoid overdraft fees
  • Plan for upcoming expenses
  • Maintain good relationships with creditors
  • Reduce operations disruptions due to unpaid bills
  • Ensure payments-related compliance, such as for wages and taxes

How Can Gaviti Assist With Boosting Your Account Balance?

Our team has worked hard to create an accounts receivable tool that automates tedious processes and boosts cash flow. This, in turn, has a direct and positive impact on your bank balance. It also helps you reconcile your general ledger accounts and reduce the need for bad debt write-offs. Test our software to see what it can do for your business.

Those that are familiar with the workforce management space need no introduction to and its powerful work OS tool. recently moved to an automated accounts receivable (A/R) collection system, powered by Gaviti, to replace its outdated annual reporting methodology.

From’s accounts receivables department:

With our business and sales growing exponentially, Gaviti has been a key tool in ensuring our DSO has not only stopped increasing but also shown improvements over a relatively short period of time. The ease of use combined with a highly responsive and helpful team… We have been able to quickly implement a comprehensive and versatile collections process.

When you stop to consider the broader, organizational benefits of automated A/R solutions, it’s easy to understand why was so successful. The right A/R collection software can improve cash flow as well as the performance of key metrics – such as days sales outstanding (DSO) – within your organization.

Improve DSO Collection Processes

At its core, DSO collection is a cash flow problem. According to a U.S. Bank study, 82% of businesses fail due to poor cash flow management.

Part of this issue is attributable to the time-consuming processes inherent in manual collections. DSO collections and cash flow already vary from month to month. When you add the time spent managing spreadsheets across late payments, grace periods, and lines of credit, you have an untenable system where staff spends more time corralling reports than processing payments. And while you may not enjoy managing the nitty-gritty details of your business’s finances, your financial processes are ripe for optimization. Consider just a few ways that accounts receivable collection software can streamline your enterprise DSO:

When you work to improve your accounts receivable collection, you’re working toward a healthy financial process where DSO stays low. But that’s not the only benefit of an A/R collection solution.

Stay Informed

5 Benefits of Automated Accounts Receivable Collection

In any discussion about the benefits of accounts receivable automation, it’s important to cover the broader benefits it provides:

  1. Better staff efficiency by reducing the manual hours required to perform collections tasks – all those hours you spend chasing invoices, calling clients, or writing follow-up emails add up.

  2. Ensure your data’s accuracy – real-time accurate data will prevent your company from making errors.


The benefits of the accounts receivable collection software are clear, and once you’ve deployed
you’ll have a hard time going back.

A/R Collections Best Practices

Although automated accounts receivable software brings a new dimension to your financial processes, the fundamentals of accounts receivable best practices remain the same. It’s a straightforward process that nevertheless tends to get bogged down by inefficiency. This is where automation software pays off.

Consider how you can leverage financial technology like this throughout your organization to improve key financial metrics. Technology is one option. Outsourcing accounts receivable collections to a service provider that can handle all the details for you is another. You have plenty of options, and now it’s just a matter of selecting which improvements will yield the best results for your enterprise.

Related Terms