Many small business accountants are experiencing difficulty monitoring their receivables because there is no aged A/R report.
If we take the balance sheet of the business, we will see only one total amount of accounts receivable and will not know what the age of this balance is, that is whether the customers are paying on time and how much days the balance outstanding will remain on the books before payments will be received.
In order to analyze quality of the receivables, their aging is used. It represents grouping of debt from customers into certain groups depending on their age, i.e. debts outstanding for 30 days, 60 days, 90 days and more.
Based on such split we can judge on the quality of accounts receivable,by comparing the age of the major groups with the payment period determined.
In this video Danny Rocks will create an A/R Aging Report in Excel using the total for invoices that are "past due" 1 - 30 days, 31-60 days, etc.
If this tutorial has been of any help to you then please leave a comment and let us know how it has helped you.
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