Aged Debtors Report Explained

An "Aged Debtors" report is one of those mysterious sounding things that accountants talk about. If you've got a minute to spare we can de-mystify it for you.

An Aged Debtors report is simply details about how much you were owed at a certain period in time.

The report below is based on 1st March 2008.

The first column is easy enough - it's the name of the customer that owes you the money.

'Balance' simply tells you how much they owed you on this date.

Now comes the more useful part....

'Current' tells you how much of what they owe is from the current month (ie, March in this example). So although John Smith owes you 90p, it's not a big deal because he was only recently invoiced.

Next we have the 3 months prior to the month we are looking at. So, as we chose March as the starting point - Feb, Jan and Dec are listed. In these columns you can see how much of the 'balance' figure results from invoices raised in these months.

So looking at customer Acme Limited, we can see a number of things:

• They owe us £68.17 in total
• £32.90 of that money is from an invoice raised in February
• Another £32.90 is from January
• £0.79 is from December
• £1.58 is owed from some point prior to December

Whilst this report is useful for you as a business owner, it's also useful to others. For example, your bank manager might want to see this if you have (or are applying for) a loan. A high number in the total for the 'Older' column tells the bank manager that you are having trouble getting paid by your customers.

There is another report called Aged Creditors. This gives you the exact same kind of information, but is based on what you owed your suppliers at a particular time (as opposed to what your customers owed you).

An unhealthy Aged Creditors report would worry your bank manager even more as it suggests you are having problems paying your suppliers.

View all KashFlow Accounting Reports.