What is an Aging Schedule?

Posted In | Finance | Accounting Software

What is an Aging Schedule?

An aging schedule is a tool that businesses use to manage their accounts receivable and track the collectibility of their outstanding customer balances. An aging schedule typically lists each customer account and the amount of time that has elapsed since the last payment was received for that account. By analyzing the aging schedule, a company can identify which accounts are past due and may be at risk of becoming uncollectible.

Why is an Aging Schedule Important?

The aging schedule is an important part of a company's accounts receivable management process. By regularly reviewing the aging schedule, a company can take proactive steps to collect past due balances and prevent potential losses from uncollectible accounts. For example, a company may use an aging schedule to identify accounts that are past due and contact those customers to remind them of their outstanding balances and discuss payment options.

In addition to helping a company manage its accounts receivable, an aging schedule can also be useful for tracking the overall health of a business's accounts receivable. By analyzing the aging schedule over time, a company can assess its ability to collect outstanding balances from its customers and identify trends that may indicate potential problems. For example, if the aging schedule shows that a large number of accounts are becoming past due, this may be a sign that the company's credit policies are too lenient or that its customers are experiencing financial difficulties.

Overall, an aging schedule is a valuable tool for managing accounts receivable and tracking the collectibility of outstanding customer balances. By regularly reviewing the aging schedule, a company can take steps to collect past due balances and prevent potential losses from uncollectible accounts, ultimately improving its financial performance and stability.

Example of Aging Schedule

An example of an aging schedule can be seen in the following table, which shows the accounts receivable for a company called XYZ Inc. and the amount of time that has elapsed since the last payment was received for each account:

Customer	Last Payment Received	Days Past Due
ABC Corp.	30 days ago	30
DEF Inc.	60 days ago	60
GHI Co.	90 days ago	90
JKL Ltd.	120 days ago	120
MNO Inc.	150 days ago	150

In this example, the aging schedule shows that the company has accounts receivable from five customers, and the amount of time that has elapsed since the last payment was received for each account ranges from 30 to 150 days. By analyzing the aging schedule, the company can identify which accounts are past due and may be at risk of becoming uncollectible. For example, the aging schedule shows that the account from DEF Inc. is 60 days past due, indicating that the company may need to take action to collect the outstanding balance from this customer.

By regularly reviewing the aging schedule, the company can take steps to collect past due balances and prevent potential losses from uncollectible accounts. For example, the company may use the aging schedule to identify accounts that are past due and contact those customers to remind them of their outstanding balances and discuss payment options. By doing so, the company can improve its cash flow and manage its accounts receivable more effectively.

How Can Gridlex Sky Help in Maintaining Aging Schedule?

Gridlex Sky accounting software can be used to create and maintain an aging schedule, which is a tool that businesses use to manage their accounts receivable and track the collectibility of their outstanding customer balances. Using Gridlex Sky accounting software to create and maintain an aging schedule can provide several benefits.

A few benefits are:

Gridlex Sky accounting software can automatically calculate the amount of time that has elapsed since the last payment was received for each account, making it easier for a company to track the age of its accounts receivable. This can save time and reduce the risk of errors compared to manually calculating the aging of accounts receivable.
Gridlex Sky accounting software can make it easy to sort and filter the aging schedule by various criteria, such as the amount of time that has elapsed since the last payment or the customer's credit rating. This can help a company quickly identify accounts that are past due and may be at risk of becoming uncollectible, allowing the company to take proactive steps to collect those balances.
Gridlex Sky accounting software can provide real-time updates to the aging schedule, allowing a company to see the latest information on its accounts receivable at any time. This can help the company stay on top of its accounts receivable and make more informed decisions about how to manage and collect outstanding balances.

Overall, Gridlex Sky accounting software can be a valuable tool for creating and maintaining an aging schedule, providing an efficient and accurate way to manage accounts receivable and track the collectibility of outstanding customer balances.