Aging Report not to be confused with Accounts Receivables or AR or also A/R is a categorization of invoices outstanding or customer’s balances by the length of time it is outstanding (unpaid). The name aging report derives from the age invoices/ balances on it.
The aging report is a business intelligence tool that can be used in multiple ways to drive business decisions and action. Rule of thumb is, it is better not to have a lot of older buckets as it might be an indicator of several potential problems. Some might be: business not able to collect, not able to deliver the goods or projects or might have bad credit policy.
Invoices or balances are usually grouped into buckets – aging buckets.
Standard buckets are 30 days. Therefore, you can expect a standard report to have the following groups:
Upcoming – Not due yet
1 – 30 days – less than month overdue
31-60 days – between a month and two months overdue
61 – 90 days – between two and three months overdue
91 and over – over a quarter (3 months) overdue
You can create your aging report in a spreadsheet or export it from your accounting software. If you are using a spreadsheet to translate your receivables into you will end up with a result similar to this table, that can also be translated to the chart below:
Gaviti uses your invoice data and automatically creates a dynamic aging dashboard for your benefit and takes action accordingly. Today, you do not have to work hard in order to have receivables BI and dashboard. With Gaviti you can automate your business intelligence creation and action process according to best practices and pre-defined decision while you get periodical reports.