Aged account payable report
What is an aged account payable report
An aged accounts payable report is a financial document that shows the outstanding balances of a company's unpaid bills, grouped by the length of time they have been outstanding. The report typically lists the creditors' names, invoice amounts, and payment due dates, and separates the unpaid bills into categories such as "current," "30 days past due," "60 days past due," and so on. The purpose of the report is to give the company an overview of its outstanding payables, and to identify any bills that may be in danger of becoming delinquent. It is used by the finance team or Accounts payable department as a tool to manage and track the company's payable.
Why is it important to a lender
An aged accounts payable report can be an important tool for a lender in assessing a company's creditworthiness and financial stability. A lender may use the report to evaluate a company's ability to pay its bills in a timely manner and to identify any potential financial risks.
If a company has a large number of unpaid bills that are more than 30 or 60 days past due, it could indicate that the company is having difficulty managing its cash flow and may be at risk of defaulting on its loans. On the other hand, if a company has a low number of overdue bills, it could indicate that the company is financially stable and has a good track record of paying its bills on time.
Additionally, by looking at the nature of the bills, a lender can also assess whether the company relies heavily on supplier credit, this can be a red flag for lenders if the company is not generating enough cash to pay bills on time.
Overall, an aged accounts payable report can provide a lender with valuable information about a company's financial health and its ability to manage its debts, which can help the lender make informed decisions about lending to the company.
How to prepare this document
There are several ways to obtain or prepare an aged accounts payable report.
- Use accounting software: Many popular accounting software programs, such as QuickBooks or Xero, have built-in reports that can generate an aged accounts payable report. These reports can be customized to show the information that is most relevant to your business.
- Manually prepare the report: You can also prepare an aged accounts payable report manually by creating a spreadsheet or using a template. You will need to list all of your unpaid bills and include information such as the creditor's name, invoice amount, and payment due date. Then, you can group the bills by the length of time they have been outstanding, such as "current," "30 days past due," "60 days past due," etc.
- Outsource to an accountant or bookkeeper: If you don't have the time or resources to prepare the report yourself, you can also hire an accountant or bookkeeper to do it for you. They will have the knowledge and experience to generate the report quickly and accurately.
- Use a third-party tool: There are also some third-party tools available that can help you generate an aged accounts payable report, these can be online platforms or even an add-on to your current accounting software.
Regardless of the method you choose, it's important to keep accurate and up-to-date records of all your unpaid bills so that the report is accurate and useful. It's also important to review the report regularly to ensure that all your bills are being paid on time, and to identify any potential issues before they become a problem.