An accounts receivable aging report lists unpaid invoice balances and tells you how long they have been outstanding. This report can help you identify open invoices and collect from clients who are slow to pay.
What Is Reporting on Accounting Receivable Aging Reports?
Aging of accounts receivable can be described as you sorting receivables by due dates. This may help you see the impact that bad debts may have on your business.
Accounts receivable are usually created when your business offers something to a client on credit. For example, a dentist might fill a cavity and then give their patients 30 or 60 days to pay for the service. Invoiced expenses are considered business assets.
Aging reports should be regularly prepared to identify the average age of receivables and clients whose debt may be a potential loss. Traditionally, the goal is to collect on invoices quickly, moving the money to your bank account.
An accounts receivable aging report should list each client who has an outstanding balance. They will typically be divided into the following categories:
· 1 – 30 days past due
· 31 – 36 days past due
· 61 – 90 days past due
· 91 – 100 days past due
· 120 days plus past due
Following up on unpaid invoices can be time-consuming. Here at Fusion CPA, we offer accounts receivables support that can do this task for you, giving you more time to grow your business.
What Is the Purpose of an Aging Schedule?
Aging schedules explain the relationship between the bills of your business, unpaid invoices, and their respective due dates. Accounts receivables are divided into age categories in an aging schedule. This helps you see your complete outstanding accounts receivable balance and how long different items have been outstanding. With this, you can determine which clients pay on time and which clients are behind. It can also serve as a basis for cash flow estimation. QuickBooks is a comprehensive software you can use to prepare aging schedules.
Why Is Reporting on Accounting Receivable Aging Reports Important?
There are several benefits that may come from using accounts receivable aging reports. They include:
· Giving you the ability to communicate with clients regularly, so they see that you are on top of your collection process.
· Allowing you to reevaluate payment terms with suppliers and make changes when necessary.
· Cutting ties with clients who regularly pay their invoices late. Clients who pay invoices late can create cash flow problems from your business.
· Stopping the providing of goods and services to clients who pay late before the issue reaches the point where you have a bad debt to write off.
If you sell unpaid invoices to companies that purchase them, they will want to look at your aging reports to determine the factoring rate.
Improve Cash Flow
If your business does not have an accounts receivable aging report, you may be hard-pressed to maintain healthy cash flow. Potentially bad credit risk could go unidentified. Here at Fusion CPA, we offer accounts receivable support as an outsourced bookkeeping service. We can create estimates and invoices and send them to your customers. Our team of experienced accountants has the expertise to help you manage your bookkeeping, including keeping receipts, bills, and other documents up-to-date using cloud software. You may benefit from a reliable outsourced bookkeeping firm that can monitor your invoices, bookkeeping, and general accounting. We are here to help you if you need support. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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