Account Receivable Aging Report Sample
Whereas accounting terms, the Aging Of Accounts Receivable can seem confusing and unclear from the first glance. However, this term is not as sophisticated and this article will explain the easiest way.
The essence
Turning to the accounts receivable, we can understand this term as debt for the business customer for the goods or services purchased on credit. Each element in receivables balance represents a particular client and particular date. When selling goods or services on credit, payment date given business due to customers.
Taking only Company balance sheets, we will not see a total amount of accounts receivable and not know the age of this equilibrium, ie, whether customers are paying on time and long number of days left until the payments are received. In order to analyze the credit quality, aging is used. Represents debt group of customers in certain groups based on their age, ie, the debt for 30 days, 60 days, 90 days and more. Based on this lack of coordination We can judge the quality of accounts receivable, ie, comparing the age of the main groups with specific pay period.
Practical examples
For better understanding consider a practical example, where the company has $ 300,000 balance receivable on the balance sheet at October 31, 2009. It allows customers pay in 60 days. Accounts receivable report on seniority provided the following information:
Age balance____________________Amount_________% total balance
Less than 30% days__________________ $ 204000________32
30-60 days________________________ $ 60000________20 %__________
60-90 days________________________ $ 135000_______45 %__________
Over 90 days__________________ $ 9000_________3 %___________
Total____________________________ $ 300000_______100 %__________
What we can say about the quality of the debt of the clients of this report? We can see that 45% of accounts receivable customer is the age of whose debt is more than 60 days, which means that 45% of clients (without taking into account the 3% of clients whose age is above 90 debt days) are the delay in payment of its debt, the company needs to pay within 60 days. This may indicate that the goods are sold to customers of the problem, also poor management of customer debt and other issues to be explored, as a result of the analysis in this report.