Aging: The Daily Definition

 In The Daily Definition

What is aging?


Aging is a way of managing invoices, orders, etc., by separating them according to age, due date, receipt dates, or similar criteria. Aging helps businesses keep a close eye on transactions that are past due or otherwise urgent. This helps the accounting team gauge the relative financial health of their customers.

An example:

A business that offers payment terms should periodically run an aging report on their accounts receivable. Separate your invoices by those that are current, 1-30 days past due, 30-60 days past due, etc. to get a birds-eye view on which of your customers are posing a risk for your company.

Aging reports can also be used to analyze your accounts payable. These reports highlight which vendor invoices are in need of the most attention. Keeping a close eye on your accounts payable helps you maintain good relationships with your vendors — you don’t want to find yourself on the receiving end of your vendor’s aging report bad list!

Our two cents:

We’ve said a thousand times before, and we’ll say it a thousand times more — it all boils down to visibility.

Easy access to accurate data is critical to the continued success of a business. This data needs to be more than easy-to-access, though. It needs to be up-to-the-minute accurate and reliable. And the surest way to guarantee that your data is a true reflection of the state of your business is to integrate your accounting platform with your ERP solution. 

By integrating the two seemingly independent systems, you bridge the gap that often forms between your operations and your accounting department. When everyone is accessing data from the same source, you can rest easy knowing that everyone is on the same page. Plus, you eliminate the possibility of data entry errors that occur when transferring information between programs. It’s a win all around!

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