Whether you want to improve your collection process or you simply need a real-time overview of your company’s outstanding receivables, an Accounts Receivable (A/R) Aging report can provide the information you need. QuickBooks Online, a widely-used accounting software, provides a tool called the Accounts Receivable Aging Report (A/R Aging Report) to help businesses monitor and manage their receivables effectively.
In this article, we’ll discuss the A/R Aging report, its significance, and how to run it in QuickBooks Online.
Understanding the Accounts Receivable (A/R) Aging Report
The Accounts Receivable (A/R) Aging report presents a summary of a company’s outstanding customer invoices and the length of time these invoices have remained unpaid. Similar to the A/P Aging Report, it categorizes receivables into various time frames, usually in 30-day increments, to track the aging of outstanding invoices. Common categories include Current, 1-30 days past due, 31-60 days past due, 61-90 days past due, and 90+ days past due.
Businesses use the A/R Aging report to assess the state of their outstanding receivables, manage cash flow, and prioritize collections efforts. It serves as a communication tool between a company and its customers, helping to ensure that payments are received promptly and efficiently.
When Do Companies Need an A/R Aging Report?
- Cash Flow Management: The A/R Aging report provides a real-time snapshot of the company’s outstanding receivables, helping businesses anticipate cash inflows and allocate funds appropriately.
- Collections Strategy: By categorizing invoices by age, businesses can focus their collections efforts on the most overdue invoices, improving the efficiency of the collections process.
- Customer Communication: It serves as a transparent way to communicate with customers regarding unpaid invoices and can be used to follow up on overdue payments.
- Financial Reporting: An A/R Aging report is often required for financial reporting purposes, such as when preparing financial statements, assessing liquidity, or working with external auditors.
- Credit Assessment: Businesses can use the report to evaluate the creditworthiness of their customers and make informed decisions about extending credit.
How to Run an A/R Aging Report in QuickBooks Online:
To get started, click on the Reports tab in the left menu bar. Then, type “Accounts Receivable Aging” or “A/R Aging” into the search bar. QuickBooks Online will provide suggestions. From here, you can select the A/R Aging report you wish to create. For instance, click on the “Accounts Receivable Aging Summary” or a similar report option that suits your needs. This will open the report customization options.
Preparing to create an A/R aging summary report in QuickBooks
You can customize the report by specifying the reporting date and other relevant settings. You may specify the number format, include your company logo, and customize the headers and footers.
Customizing an A/R aging summary report in QuickBooks
Once you customize the report, click Run Report. The report will display a list of outstanding customer invoices, categorized by aging buckets, and include details such as customer names, invoice numbers, invoice amounts, and due dates.
Sample A/R Aging Summary report in QuickBooks Online
The Accounts Receivable Aging report in QuickBooks Online is a great tool to help you manage your outstanding receivables effectively. By following the steps outlined above, you can easily generate and leverage this report to ensure timely payments, improve cash flow, and maintain healthy customer relationships.