Aging Out The Month

Sharon Boyd has nearly 25 years of experience between both the healthcare and marketing industries. In addition to being an RDH and content writing expert, she also holds a degree in business. Her responsibilities primarily include tackling the communication barriers between small business owners or healthcare providers and their prospective clientele.

Aging Out The Month

Closeout. End of Month. The time when no one in the office can take sick or vacation days or the world will end. Well, maybe it won’t end, but it will back up processing of new business for the next month for a day or two. Closing the month is a detailed and time-consuming process. The successful office manager will have a checklist of reports to run, documents to keep and file away, and items to follow up and clear for the end of the next month.

One of those reports should always be the Accounts Receivable Aging Report.

Why Run the Aging Report?

The AR Aging Report shows you which accounts are past due for 30, 60, or 90 days. It’s good information to know for more accurate projections of income. If you know that a particular account will more than likely be paid late, you know not to depend on that amount of income. But this begs the question…

What Do I Do with The Information?

The main thing is deciding what to do with the information on your Accounts Receivable Aging Report. You need to be able to count on your income to build your business and pay your bills. Depending on what goods or services you offer, you could take the following actions:

  1. Send a letter or call the customer or client to discuss the late payment. If you have a limited territory of sales, and develop personal relationships with your customers, a phone call might be the best option!
  2. Renegotiate terms for consistently late payments. If you have a vendor or customer that is always late or several months behind, but you can’t or don’t want to “cut them loose,” use the late payments as a starting point to discuss new terms. This could include a penalty for payments more than 30 days late, or an incentive for X number of payments made on time.
  3. Send it to collections. Depending on your business type and volume, it may make more sense to send your past due accounts through the collections process. Don’t have a set collections process? It could be the duty of a specific employee, a department, or even a third-party agency. Whatever way you choose to proceed with collections, make sure it complies with state and federal regulations!
  4. Cancel the purchase contract. No business wants to cancel a purchase order, but it can free up inventory for purchase by another customer, and it helps keep your bottom line healthy!

Your month end reports are all important to keep things running. They highlight the gaps in your performance, and provide valuable feedback. If you can interpret the information the right way, running your Aging Report can help you anticipate and manage your cash-flow and stabilize your month! In the end, it’s essential information that you need to make smart financial and business decisions in the future.