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The Importance of Accounts Receivable Aging Report In Accounting Software

In accounting, it may difficult to keep track of invoicing and/or unpaid invoices. To keep track, the first thing you need to do is to set up an accounts receivable report. With the Xero accounting software, you can do exactly that.

The key reasons to create an accounts receivable aging report

Rum an accounts receivable aging report. In short, it lets you keep track of unpaid invoices because the report shows you the details of each customer invoice, and the length of time it has been outstanding. After a business reviews the accounts receivable aging report, it will start following up with the specific customers. The business can:

  • Email the customer again a copy of the unpaid invoice.
  • Before the invoice due date or after the due date (of the invoice) has passed, send a friendly reminder to the specific customer.
  • Call the customer to remind her about the unpaid invoices.

The reasons to review accounts receivable aging report on a weekly basis

The advantages include the below items.

Your business gets the capability to forecast incoming cash flow.

You can easily and quickly find out usually how much time it takes most customers to pay their invoices (after they have received the goods/services which they have purchased, and the insights related to the same matter).

It allows you to quickly see and keep track of those customers who have overdue payments and are unlikely to ever make payments. You can then make decisions on how to deal with those customers (in order to collect payments).

The reports

Report 1:

The aged receivables detail report shows the customer contact, invoice date, due date, invoice number and if the invoice is current or not (i.e. it has not become due or not). When the invoice is overdue, the report then shows the number of days it is past due. For example, 1-30, 31-60 days, 61-90 days.

Report 2:

The aged receivables summary report is a summarized version of the aged receivables detail report. It reveals the customer contact and a total of all invoices that are current or past due. For example, 1-30, 31-30 days, 61-90 days and older.

Report 3:

The receivable invoice detail report displays the line by line details of all outstanding invoices, credit notes, overpayments and prepayments. You should use this report view the invoice details for multiple invoices without, and you won’t have to pull up each invoice individually.

Report 4:

Receivable invoice summary report is the summarized version of the invoice details report, and does not display the line by line detail of each invoice. In the report, each invoice is summarized on one row. It reveals the customer contact, invoice date, expected date, reference information, the outstanding balance, source and if the invoice has been sent to the customer or not.

More tips

When you have already created and sent your invoices through Xero, the data/record is already in it. All you need to do is to set up payment terms for each of your customers. This ensures the due dates are accurate. To have your invoices marked as paid, make sure you enter the customer invoices into Xero.