A/R Management & Automation
Collections Analytics
Customer Self Service Portal
Customer Invoice Distribution
Cash Application
Gaviti Disputes and Deductions
Credit Management and Monitoring
ERP Compatibility

The Importance of the Accounts Receivable Aging Report

As an assessment and diagnostic tool, it’s hard to overstate the importance of your company’s accounts receivable (AR) collections aging report. Also known as “accounts receivable reconciliation,” this is a common report that offers a broad overview of a company’s financial status as well as the status of its customers and their abilities to pay.

What Is an AR Aging Report?

As an assessment and diagnostic tool, it’s hard to overstate the importance of your company’s accounts receivable (A/R) aging report. Also known as “accounts receivable reconciliation,” this is a common report that offers a broad overview of a company’s financial status as well as the status of its customers and their abilities to pay.

What Is an Accounts Receivable Aging Report?

An aged receivables report is a tool that categorizes your company’s receivables in accordance with how long invoices have been outstanding. This report is a valuable tactic to stay on top of cash flow and improve short-term collections forecasting. It usually includes information such as the customer name, invoice details, amount due, outstanding balances and the aging categories (e.g. the periods they are outstanding, such as 30 days, 60 days, etc). 

A collections team can use the accounts receivable aging report to review how long an invoice has gone unpaid as well as the balance of all unpaid services.

Here’s a quick example of how a basic accounts receivable aging analysis report looks:

CustomerA/R0-30 Days31-60 Days61-90 Days90+Days
Company A$18,000$11,000$7,000  
Company B59,00022,00020,00017,000 
Company C117,00067,00031,00012,0007,000
Company D15,000   15,000

Build the Best A/R Team

If you are thinking about bringing your accounts receivable in-house or you are experiencing challenges hiring the right people, this guide is for you. Download this guide and learn:

  • The challenges of scaling a collections team
  • How to handle and better manage these challenges
  • The best tips on effectively building your own A/R collections team
Download the Ebook

Why Do You Need an Accounts Receivable Aging Report?

An AR collections aging report provides important data on customer payment behaviors and the effectiveness of crediting/collection functions. Running an AR collections report regularly (usually weekly or monthly) helps you understand what to expect from customers in terms of payments. It also identifies cash flow issues before they become problems.

Cash flow problems usually relate to collection policies or customer behavior. Certain clients may be delinquent more often than others. AR aging reports provide concrete information that can be used to take action. A good example is making the choice to withhold services for clients beyond your payment grace period. Finding the right balance between grace periods and service restrictions is easier with regular collections reporting. It ensures you don’t lose money providing services that will never be paid.

An aging report also analyzes how your customers’ companies work. This ensures your invoicing processes are aligned with their accounts payable. It also helps provide documentation in the event that your company has bad debt that it is able to take as a tax deduction. 

Why Automation Is Key to an Effective Accounts Receivable Aging Report

Automation is well-established as a functional tool for efficient accounts receivable management. Many accounts receivable management platforms support automated reporting functions due to the great benefits they provide to a company’s AR workflows and overall efficiency:

  • Access reports in an instant. Does your team spend too much of the workday collecting data and generating reports? Automated solutions streamline the process by quickly pulling and organizing data based on pre-set parameters in your software. It’s the simplest way to spend less time creating reports and more time actually reviewing those reports.

  • More accurate payment forecasting. With streamlined reporting behind you, it’s far easier to accurately manage cash flow accounting, behavior monitoring, and customized allowances for doubtful accounts. Plus, automation takes some of the human element out of the equation, which substantially reduces errors.

  • Reduce reporting time and effort. Manual collections work is time-consuming and tedious. It delivers poor workflow efficiency which is frustrating for your team.

In Smartsheet’s Automation in the Workplace, over 40% of workers surveyed spent at least a quarter of their workday on manual tasks across emails, data collection, and data entry. Leverage automation to eliminate inessential tasks and leave teams free to focus on more interesting, productive work.

How Gavit Helps You Manage Your Aged Receivables

Even though aging of accounts receivable payments is inevitable for most companies, accounts receivable automation offers the best way to stay one step ahead. Gavit’s invoice-to-cash A/R management and automation system has multiple modules that not only improve the performance of your collections team, but help you manage and optimize the entire A/R process with the help of intelligent automation and advanced analytics.  

These modules include: 

  • A/R management and automation. Manage collection tasks and workflows, customize collections strategies, and gain real-time visibility into outstanding balances, customer payment history, and collections status.
  • Collections analytics. Get a comprehensive dashboard that gives you real-time insights into critical metrics that directly affect your cash flow. Track a range of traditional KPIs such as Total A/R, DSO, collections rate, and customer risk in addition to unique smart KPIs. 
  • Customer invoice distribution. Automate the distribution of invoices through multiple channels to ensure they reach your customers effectively. Invoice data can be pulled from any single or multiple ERP or business system to ensure accuracy throughout the process. 
  • Cash application. Ensure precise cash allocation and real-time reconciliation with your primary bank and manage cash from multiple sources with multi-bank connectivity. This eliminates the need for manual matching, saving time and reducing error. 
  • Disputes and deductions. Capture and document information including deduction reason codes, dispute details, supporting documents, and communication history to allow for a centralized approach that ensures better visibility, enhanced collaboration and a streamlined resolution of the process. 
  • Credit management and monitoring. Send online credit applications to both existing customers and potential prospects. Get alerts in real-time about customers with increased credit risk. By being proactive, you stay ahead of credit risk, minimizing the impact on your cash flow and reducing the likelihood of bad debt.

Want to learn more about how Gaviti can streamline your A/R process and help you better manage your A/R aging reports? Get a demo today. 

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