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Hello,
In Accounts Payable, the purpose of generating the ageing is to check the open items in the Vendor ledger, if it's debit we need to recover the same from the Vendor and if it's credit we have to pay the same.
Aging report reflects the clear picture of outstanding invoices of the customer in accordence to the time period.
This report tells us the financial health of our customers also.
An other purpose of aging report is an estimation of bad debts and their recovery.
AR Aging Report Clear That What Should Credit Terms & Condition To Know The Recovery Which Collected On Time Of Credit Basis AP Aging To Know On Future Basis To Know The Cash Flow Status Of Your Suppliers......
Sticking to the core of question the answer can be the basic purpose is to view the aged balances of debtors and creditors (under and over the credit limits) also useful for taking the decisions of making provisions for bad N doubt full debts or enjoying discounts from the customers paid within the credit limits.
In sample answer , For AR aging to know the money which needs to be collected on time and which is overdue in order to take the necessary action to collect these money and investigate the reasons for not paid till now , FOR AP aging to know the volume of money need to be paid now or on future basis to know the cash flow status of your suppliers and how to handle them, beside to follow for SOA as well to know which must send invoices to close their payments an which needs to complete their shipments and receiving the Goods as well.
The debtors aging report lists all overdue accounts and the length of time they are late (30 days,60 days or90 days). You may use this report to review any overdue accounts periodically and to follow up those that are90 and60 days overdue more vigorously.
The payable ageing report provide information on the age of your accounts payable invoices. These reports can be used as tools to effectively manage your company's accounts payable, by helping you determine which invoices are not yet due and which are already past-due.
Hello Friends,
Ageing helps us to have the clear picture of Current cash funds available so as to have a healthy Bank account, so as to keep the Business in strong hold.
Ageing payable helps us to reduce the extra overdraft on Bank.
Ageing Receivable helps us to have a clear picture Bank Balance in future so as to expand the Co.
Timely and consistent follow up of Customer accounts to streamline the flow of funds and identifying the risk aspects prima facia.
I agree with Kamran.
