The general ledger account “Accounts Receivable” in Sage 100 ERP usually contains only summary amounts and is referred to as a control account. The details for the control account – each credit sale for every customer – is found in the subsidiary ledger for Accounts Receivable. The total amount of all the details in the subsidiary ledger must be equal to the total amount reported in the control account. The detailed information in the accounts receivable subsidiary ledger is used to prepare a report known as the Aging of Accounts Receivable.
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An A/R Aging report lists each customer, their due balance, and the time periods for which that balance has been outstanding. The report usually categorizes the sections as: “Current, 30 days, 60 days, 90 days, 120 days, over 120 days” It can also be a user-defined parameter. If the customer has several bills that were incurred at different times, the report will show how much is due and at what time.
The Aging of accounts receivable report is typically generated by sorting the unpaid sales invoices in the subsidiary ledger—first by a customer and then by the date of the sales invoices. If a company sells merchandises (or provides services) and allows the customers to pay 30 days later, this report will indicate how much of its accounts receivable are past due. It also reports when are the accounts past due.
Key features of the AR Aging report
- Shows how much money your customer owes
- Shows how old the balance is (30-60-90-120+days).
- Shows the claimed source for each balance.
- The starting point to identify abnormal payment trends based on payers, practice history, and standards.
- Holds data for the Payer Mix Summary which projects potential expected income revenue.
A/R aging Report works on a basic rule which is as follows:
In debt collection, it is said that “The longer a debt is owed, the less likely you will to be able to collect It.” i.e. the longer a bill is outstanding, the less likely you will be able to collect the same. Here are some guidelines to consider when reading an A/R aging report:
- First, look at the highest amount of money owed by all customers. Are these amounts current? Are they 30 days? Or have these bills been outstanding for 120 days or more? Working on the 80/20 principle, going after the biggest offenders (using your collections management system, of course) will bring you the highest return. Determine how you will handle each of these large bills, write up a plan, and have your accounts receivable manager start working.
- Next, look at those bills which have been due for a long time. Determine whether you are ready to take this customer to the next step of the collection process: collections agency, or small claims court. Or do you think this bill is unpayable?
- Finally, use your collections system to determine how you will contact all customers with bills 30 days overdue or more. Let the system guide you, but don’t hesitate to make exceptions. For example, you might know that a customer’s wife has terminal cancer, and you might decide not to take that person to court. It is your company; you get to decide.
These reports can be customized in home page to “Show” credits which possibly shows the money that was applied incorrectly or balances not properly transferred. Also, when “Show” is unapplied, it means money that has been created in payments but not yet applied to claims.
Filters used with Aging Reports
- Show Aging By = Designates specific period end date.
The purpose is to take a snapshot in time. No need, just change Show Aging By to get “month-end,” reports on an as-needed basis.
- As Of = Gathers data of report that was updated by this As Of date.
Any date before the present may not have the most accurate data for activity may occur to show different data (claims may be billed and payments may be posted/created)
Show/Hide Report Columns = Default to show all but Credit and Unapplied in AR Aging Summary.
Different columns when get to AR Aging by Insurance and AR Aging by Patient
- AR Aging By Insurance
- AR Aging By Patient
In conclusion, you can use the A/R aging report to make decisions on next steps for all customers who owe you money.
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