People not paying invoices are not that much like in the industry, and that’s lightly putting it. Keeping track of past due invoices can influence the healthy cash flow the companies are expecting and affect the company's financial statements.

If bad debts are getting more frequent, you will probably get a lot of unwanted empty account receivables. An aging report is an excellent tool for tracking those doubtful accounts and creating an aging schedule with invoice date and collection process in place!

Accounts receivable aging reports are becoming more and more popular. They aim to identify customers with bad debt who is a potential credit risk and an issue for the company’s financial health.

In this article, we will describe how to keep the cash flow issues at bay, prepare the AR aging report with some great templates, and provide great reasons why you should use them. If credit risks are something that you would like to avoid in your company, and late payments are irritating so much that you need an invoice date alerting mechanism – we have got you covered!

But first, let’s talk about the software we will use for this project. Accounts receivables aging report is a rather delicate subject. Whether it’s calculating the allowance for doubtful accounts or searching for outstanding payments, you cannot second guess your calculations.

You need to precisely identify late-paying customers, or the unpaid invoice balances will just grow and grow. For that reason, we cannot recommend anything other than Microsoft Office products.

It is the single most reliable tool for cash flow mismanagement. Whether you need to find out which customers pay their debts and which do not or just filter through many customer invoices – this software is the best way to go about it.

The company’s accounts receivables are safe with one of the most popular office-related programs ever created, with millions of users worldwide. Collection processes have never been easier than with this tool. If you are looking for something that will easily create an accounts aging report, you have found your match.

And now, let’s go over some Accounts receivable report templates that will help you with potential cash flow problems!

Aging Report Template #1

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First up on our list is one of the most utilized AR aging reports we have come across. It is a simple yet precise tool with date ranges, invoices owed, business owners who are late with their payments, and an overall bad debt expense.

You can also calculate the average collection period and see all the overdue invoices. This AR aging report helps with the most common issues. It gives an opportunity for even more overdue payments analysis for multiple clients to see what can cause the potential credit risks.

Aging Report Template #2

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Next up, we have something simpler yet still functional.  This aging report lists ever uncollectible receivables in a modern fashion with accurate data.

If you have multiple customers with a different pay cycle, this summary report can be of great help for you. You can use it whether you put the debts into age categories to see what customer owes or some other non-schedules like big vs. small business owners.

If you are looking for something that will help you count the number of days when the customer’s invoices are ripe, then this spreadsheet is something for you.

Aging Report Template #3

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And finally, we have the template that combines the efforts of both before them. It is a great spreadsheet to maintain a healthy cash flow to see the customers with overdue debts, the total amount, days past due dates, and the average age of invoices.

This will show you if you should already be calling the debt collection agency or if you should wait a little bit more to get into the customer’s bank account.

Aging Report is a financial document showing how long specific invoices or accounts payable balances have been outstanding. It’s commonly used in business to track unpaid bills and outstanding debts.

There are a couple of ways to categorize the unpaid bills. Usually, it’s done according to their age, typically in buckets of 30/31, 60 days, 90 days, or more. The report's primary goal is to help businesses identify which invoices or accounts are overdue and which require some immediate attention.

It’s a pretty helpful tool for managing cash flow and identifying potential cash shortages. It is used by businesses of all sizes and industries, so, as you may have presumed, it is universally acknowledged that it works in professional practice.

There are two main types of aging reports. Both are essential financial tools for monitoring outstanding balances and ensuring effective cash flow management. They can help businesses foresee any potential issues with their accounts and take action to avoid problems and late payment penalties.

Accounts Receivable Aging Report

The first one is the aging report commonly used to track unpaid invoices and customer balances. It categorizes the balances by how long they have been outstanding, usually in buckets of 30, 60, 90 days, or more. It helps with keeping the optimal cash flow in the company, identifying delinquent accounts, and determining the due date of specific accounts.

Accounts Payable Aging Report

The second one tracks the business's unpaid bills and debts owed to suppliers and vendors. So, it’s the other way around. It categorizes the balances by how long they have been outstanding, usually in the same buckets as the previously mentioned Accounts Receivable Aging Report. It’s vital for managing cash flow, setting up supplier payments, and negotiating payment terms.

There are several benefits to using aging reports. Here are some of the most important ones.

Improved Cash Flow Management

Aging reports can help you identify which invoices or accounts are overdue and prioritize payments accordingly. Tracking accounts receivable and accounts payable can help manage cash flow better and ensure you have enough funds to cover expenses.

Early Detection of Issues

Aging reports allow you to detect issues early on. This can help you take corrective action before the problems become more serious.

Better Customer and Vendor Relationships

If you are regularly reviewing aging reports, you can identify delinquent accounts and follow up with customers or vendors to resolve any outstanding issues. This can help you improve customer and vendor relationships and ensure that both parties are satisfied with the payment process.

Improved Decision Making

Aging reports provide a great insight into the business's financial health and can help you improve decision-making processes. For example, you can use an aging report to determine which customers or vendors are most profitable or to identify areas where they can improve their payment processes.

So, now that we know what Aging Report is and what some of the benefits come from preparing such a spreadsheet, let’s go over some key elements you need to have in your report.

Determine the Accounts

The most important task is determining which accounts you should include in your aging report. An accounts receivable aging report might consist of all outstanding invoices and problems with the customers themselves. In contrast, an accounts payable aging report might consist of all your unpaid bills and outstanding debts as a company.

Define Aging Buckets

Another essential thing to include is the time frames for your aging buckets, such as 30 days, 60 days, 90 days, or more. These will help you to categorize your accounts by the length of time they have been outstanding.

Data Gathering

Another essential element is data gathering. Collect all the necessary data for your aging report. This might include information on the customer or vendor, invoice or bill numbers, the original invoice or bill amount, the current balance owed, and the date the invoice or bill was issued. This can benefit you greatly in the future as well.

Calculate Aging Balances

Next, you need to calculate the current balance owed for each account and then determine which aging bucket it falls into based on the date of the invoice or bill. This should be pretty straightforward, so we won’t go into too much detail.

Create the Report

And – create the report. Use the spreadsheet template we have provided to make the aging report and be ready to be amazed by the possibilities. You can organize the data by customer or vendor and aging bucket and include the current balance owed and the date of the invoice or bill for each account.

Review and Analyze

After that, go over everything once again. Review the aging report to identify issues like delinquent accounts or overdue bills. Analyze the data to gain insights into your accounts receivable or accounts payable and to inform your cash flow management strategies.

Take Action

And finally – take action. Based on the insights gained from the aging report, take any necessary actions, such as following up with customers or vendors, negotiating payment terms, or prioritizing payments to manage cash flow effectively. Be sure not to “cheat out” and don’t include some “special” accounts, as it will always result in some problematic moments.

Aging reports are an essential financial tool for businesses to manage their cash flow effectively and identify potential issues with their accounts receivable or accounts payable. If you categorize all of your outstanding balances by the length of time they have been outstanding, aging reports provide valuable insights into a business's financial health and help inform your decision-making processes.

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