Analysing ageing periods can help you monitor how much money your customers owe you, and identify when money is due to come into your business. You can use this information for a number of purposes:
- Identify the customers who regularly pay late. You might then send out reminder letters or adjust their credit limits accordingly.
- See which customers whose payments are most overdue, or which ones owe you the most.
- Check on your cash flow. If a lot of money is overdue now, you might end up with cash flow problems later. By monitoring the ageing of amounts, you can identify potential cash flow problems and try to fix them.
- Go to the Setup menu and choose Preferences. The Preferences window appears.
- Click the Reports & Forms tab. You can now select your ageing method.
Assume that you want to age the following invoices as at 31 July 2015 (or any other date in July):
The examples below show the two ageing methods you can use when reporting aged receivables:
- Number of days since invoice date
- Days overdue using invoice terms.
Assume you age invoices monthly and identify your ageing periods by month names.
If you age these invoices by invoice date, the invoices will be aged as follows:
In this example, each ageing period represents the months when the invoices were generated.
The results above would be the same as per month names, but with different headings, as follows:
In this example, each ageing period represents the month in which the invoice falls due.
In this example, each ageing period represents the number of months by which the invoices assigned to the period are overdue.