Definition: An Aged Receivables report categorizes customer invoices based on their age, showing how long each invoice has been outstanding.
Importance: This report helps businesses monitor their accounts receivable and manage cash flow by identifying overdue accounts.
Usage: Credit controllers and management use the Aged Receivables report to determine collection priorities and address potential cash flow issues.
Example:
"Sweet Treats" generates its Aged Receivables report and finds:
- Invoices due (0-30 days): $5,000
- Invoices due (31-60 days): $2,000
- Invoices overdue (61+ days): $1,000
The owner follows up on the overdue accounts to encourage payment and improve cash flow.