How to take advantage of your customer aging report

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Accounting departments must pay particular attention to past due payments. Businesses that frequently deal with a backlog of unpaid invoices tend to experience poor cash flow management and damaged client relationships. A customer aging report is a crucial part of maintaining effective credit policies. In addition to supporting a phased approach to collecting the full amount owed from your customers while reducing bad debt, this document offers insight into customer behaviour. 

 

What is a customer aging report? 

 

The outstanding balances from customers are displayed in a customer aging report, also known as an accounts receivable aging report or receivables aging. These periods of time are referred to as "aging periods," therefore the longer a client owes an amount that is past due, the more their balance "ages." 

The standard aging periods used in customer aging reports include: 

  • 0–30 days overdue 
  • 31–60 days overdue 
  • 61–90 days overdue 
  • 91+ days overdue 

 

What is the purpose of a customer aging report? 

 

One of the key reports used to match up the general ledger and the customer ledger is the customer aging report. Accounting teams can use it to analyze the effectiveness of credit and collection functions and spot any issues in the collection process.

 

Example customer aging report

Read the full blog to discover how to take advantage of your customer aging report.    

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