Updated: Jun 29
In the world of business, there was a concept that was essential for every company's financial health: accounts receivable. It refers to the money that customers owe a business for the goods or services they have received.
As a construction business owner, you rely on timely payments from your customers to keep your cash flow steady. But what happens when payments are delayed, or worse, not made at all? One way to do this is by creating an accounts receivable aging report. In this guide, we'll walk you through a step-by-step infographic guide on how to create an accounts receivable aging report.
Table of Content:
What Does Aging Mean?
Aging refers to the process of categorizing your accounts receivable based on how long they've been outstanding. Typically, aging periods are broken down into 30, 60, 90, and 120+ days past due. This allows you to see which accounts are most overdue and take action accordingly.
How to Create an Accounts Receivable Aging Report: A Step-by-Step Infographic
Managing Your Construction Business's Receivables Made Easy with CCA
Keeping track of your receivables may be a real pain if you operate a construction company. You have a lot of bills to pay and need to make sure payments are done on time to maintain a positive cash flow. An AR aging report can be helpful, but making one is no easy feat.
Here are some problems you may face and solutions that CCA can offer to help you overcome them.
Difficulty Organizing Data
One of the most tedious tasks of creating an aging report is organizing the data. The name of the client, the invoice number, the invoice date, the payment due date, and the total amount owed should all be recorded.
At CCA, we provide bookkeeping services that can help you organize your data efficiently. We use Sage 100 Contractor, which automates the data process, reducing the time and effort needed to create an aging report.
Difficulty Categorizing Invoices
Invoices may be a pain to go through if you have a lot of them and categorize them by how long they've been overdue.
CCA can help you categorize your invoices based on aging periods that are specific to your business needs. We have years of experience working with construction businesses and can provide customized aging reports that meet your specific requirements.
Difficulty Keeping Track of Changes
Your aging report needs to be updated regularly to ensure that you have an accurate picture of your accounts receivable. However, keeping track of changes and updating your report can be time-consuming.
CCA can provide real-time data by using Sage 100 Contractor, which automates the process. This means that your report is always up-to-date, and you can have an accurate picture of your accounts receivable at all times.
Difficulty Taking Action on Overdue Invoices
Creating an aging report is just the first step. Once you have your report, you need to take action on overdue invoices, which can be challenging, especially if you have many outstanding invoices to follow up on.
We can help you take action on overdue invoices by sending reminders to customers who are past due and following up with them to collect payments.
If you own a construction business, you know how important it is to manage your accounts receivable to keep your cash flow healthy. Following the four steps we mentioned earlier and creating an accounts receivable aging report can help you categorize outstanding invoices, prioritize collection efforts, and identify areas where you need to take action.
Don't worry if creating an aging report seems daunting - CCA is here to help. You can get past the hard parts of making an accurate aging report and get personalized results that meet your business's needs. Contact CCA now to see how we can assist your construction firm handle accounts receivable and cash flow.