What are "Aging" Reports?

An accounts receivable aging is a report that lists unpaid customer invoices and unused credit memos by date ranges. The aging report is the primary tool used by collections personnel to determine which invoices are overdue for payment. Given its use as a collection tool, the report may be configured to also contain contact information for each customer. The report is also used by management, to determine the effectiveness of the credit and collections functions.

A typical aging report lists invoices in 30-day "buckets," where the columns contain the following information:

§  The left-most column contains all invoices that are 30 days old or less

§  The next column contains invoices that are 31-60 days old

§  The next column contains invoices that are 61-90 days old

§  The final column contains all older invoices

The report is sorted by customer name, with all invoices for each customer itemized directly below the customer name, usually sorted by either invoice number or invoice date. If the report is generated by an accounting software system (which is usually the case), then you can usually reconfigure the report for different date ranges. For example, if payment terms are net 15 days, then the date range in the left-most column should only be for the first 15 days. This drops 16-day old invoices into the second column, which highlights that they are now overdue for payment. The report primarily contains invoices, but it may also contain credit memos that have not been used by customers, or which have not yet been matched against an unpaid invoice.

The aging report is also used as a tool for estimating potential bad debts, which are then used to revise the allowance for doubtful accounts. The usual method for doing so is to derive the historical percentage of invoice dollar amounts in each date range that usually become a bad debt, and apply these percentages to the column totals in the most recent aging report.

For example, a company historically experiences 1% bad debts on items in its 30 day time bucket, 5% bad debts in its 31-60 day time bucket, and 15% bad debts in its 61+ day time bucket. Its most recent accounts receivable aging report contains $500,000 in the 30 day time bucket, $200,000 in the 31-60 day time bucket, and $50,000 in the 61+ day time bucket. Based on this information, the company should have an allowance for doubtful accounts of $22,500, which is calculated as:

($500,000 x 1%) + ($200,000 x 5%) + ($50,000 x 15%)

An additional use of the aging report is by the credit department, which can view the current payment status of any outstanding invoices to see if customer credit limits should be changed. This is not an ideal use of the report, since the credit department should also review invoices that have already been paid in the recent past. Nonetheless, the report does give a good indication of the near-term financial situation of customers.

Finally, the company's auditors may use the report to select invoices for which they want to issue confirmations as part of their year-end audit activities.

I agree with Ms. Ghada fully answer

In accounting the term aging is often associated with a company's accounts receivable. Accounts receivable arise when a company provides goods or services on credit. For example, a company may allow its customers to pay for goods or services 30 days after they are delivered. If customers do not pay as agreed, the company could experience a cash problem. In order for the company to minimize its cash flow problems and potential losses from customers who are unable to pay, companies will routinely prepare an aging reportsof accounts receivable. The aging report will list each customer's outstanding balance and will then sort the total amount into columns such as: Current, 1-30 days past due, 31-60 days past due, 61-90 days past due, 91-120 days past due, and 120+ days past due. The aging of accounts receivable allows managers to quickly see which customers are behind in meeting the agreed upon terms. An aging is usually a standard feature of accounting software. Some companies also do an aging reportsof accounts payable. This aging sorts the accounts payable amounts by due dates. 

Aging Report is a report based on analysis of the customers who have availed credit facility of the organization. It denotes how long they have availed credit, how much is due and how much is over due. It helps to estimate bad debts, to ascertain the level the provision for bad debts. Overall, it is a tool to have a credit policy in line with the overall objective of the organization.  

Sir,

Aging reports are the reports which make on the basis of date. normally we take aging report of sundry creditors and sundry debtors. Aging reports are useful for managerial and financial decisions

Thanks for the invitation

I agreed with the answer given by Ghada Eweda. 

aging report is comprehensive report in which all customers recoveries are categorized with days. this report give a user a visual help in determining which invoices are overdue for payment.

I agree with the Answer added by: Ghada Eweda  Medical sales hospital representative 30 days ago

These reports can print both detail and summary information about your customer's current and past due invoices, debit memos, and charge backs. Receivables also gives you the option to see on-account credits, and on-account and un applied cash amounts

Aging reports represents the credit period availed by the customer, it effects the liquidity of the firm. Credit and control department responsible to control the credit facility given to the debtors of the company.