The only way to be able to manage and see exactly who owes you money and when in the collections department is by using an accounts receivable aging report. It is one way to keep everything organized and keep your team on track. Those that are latest in your aging report, get the first call. Many collections departments use the accounts receivable aging report as their go to reference for all their customers and open invoices.

How Does the Aging Report Work?

An aging report can be customized and tailored to each company’s needs. Typically, the customer name is included, the amount that they owe and how many days late they are on their invoice. To make the aging report more useful, companies may color code the accounts receivable aging report to easily show which invoices are the most severely late. You many even keep the company’s contact information in the aging report so you can simply make calls from the aging report.

Why Is It Important?

An accounts receivable aging report is important because it keeps track of all your outstanding invoices. Cash flow is one of the most important assets in a company, and if you’re not aware of where that outstanding cash is then you’re likely to never receive it. Keeping track of an aging report means you are also keeping track of your business’ money.

How Do You Maintain an Aging Report?

The most popular way to maintain an accounts receivable aging report is by using Excel spreadsheets. It’s a program most of us already have on our computers and will use for other reports. However, Excel does come with its flaws and the formulas you must use to create an aging report can be complicated. If you’re not particularly Excel savvy, you could end up with numbers that aren’t correct. Another hands-off way to keep an aging report is through automated accounts receivable software. Simply hook it up with your current business software and let it run the numbers for you. Further, you can keep all your communication notes in the accounts receivable software, so you’re never flipping back and forth between systems and everything is in one place. Accounts receivable software is helpful for maintaining aging reports, and can do a lot more.

Check out our post on how to create an aging report in Excel.

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