Did you know about the accounting method that alerts you about the cash flow problems and protects your bottom line? Yes, it’s all about the accounts payable aging report! Small business owners often overlook the accounts payable aging report without knowing it can act as a valuable accounting tool to their business. This report gives an overview of how much you owe now and how much you will owe in the future. The accounts payable aging report helps you efficiently manage your cash flow and helps you from getting hit by the unexpected bills you are required to pay. If you are a small business owner wanting to learn about the accounts payable aging report, this blog is for you.
Simply managing the cash that comes in and goes out will not tell you the entire story you need and this is where the accounts payable aging report comes into play.
Accounts payable aging report, what is it?
Accounts payable shows you how much you have spent for operating your business. This usually includes the money you pay your vendors or your suppliers every week, month, quarter, or year. This AP aging report helps you with your billing by showing when your payments are due, the balance and how much you can save if you pay early or how much you can protect on your cash flow if you pay later.
What does an AP aging report include?
Many accounting software solution firms create and prepare these reports, as per the needs of a business. However, there are a few aspects found in common such as the vendor’s name, the amount owed, payment terms, and due date.
The reports in general are organized in a 30-day group making it easy to know what is due at present and in the future. The reports are customizable.
Benefits of using an AP aging report
Manage cash flow
Helps you know when your bills are due so you can pay them on time avoiding penalties or get discounts from the vendor by paying earlier.
Supply chain management
Understand your suppliers and vendors better. Get to know which vendors give you a break if you pay early and those who do not mind if you are late. AP aging report also helps you categorize and prioritize your bills based on the date it is due.
Budgeting made easy
With the AP aging report, you have a record of the spending and debt in the past which helps you determine how much you rely on credit and proves to be a useful tool when paying 30 days or longer.
To effectively manage the cash flow of a business, an accounts payable aging report is necessary. Get your accounts payable right with Park Intelli’s finance & accounting outsourcing solutions.
Also, read about how you can manage your accounts payable and accounts receivable