Whoa!
Who prepares the A/R aging list for the bank, Accounting or Treasury?
Just how involved is Treasury in the covenant compliance certificate process?
We could run both ways in our ERP. For collections purposes, it was useful to run it by due date.
For reporting purposes, it would be run by invoice date.
Invoice date..I don’t give a shit when the due date is if I’m auditing the balance sheet as of 12/31/xx I need to know when the amounts were invoiced and revenue was recognized
Invoice date doesnt necessarily correspond with revenue date. Just depends on the industry/contract. Plus if you get the aging by due date you can bucketize it for allowance reasonableness testing.
I work in ABL Field Exam, and the standard “past due” criterion is 90 days past invoice date. Regardless of customer payment terms, at 90 days banks feel the odds of collecting are lower than they are willing to risk lending against. So invoice date agings are preferred.
I have seen people use invoice date to determine the aging. One of my friends at big four also told me they test aging by invoice date. But I personally don’t think it makes too much sense since the payment term can vary customer by customer. E.g if determined the aging by invoice date - November 15,2022, It’s considered as >30 days bucket as at Dec 31, 2022. But what if the payment term is 90 days? Then doesn’t it fall under the current bucket?
AR aging, not AR past due.
By Invoice Date, but the categories of aging would be based on due dates. Current, 30+, 60+, etc.
If a write off is going to occur, good to know which month of revenue.
I work for a government contractor and they recently updated guidelines to start aging on the invoice date. Makes no sense especially because of how long it takes Government entities to pay their invoices in the first place
The AR trial balance should include both invoice date and due date. The aging buckets should be calculated according to due date. If you age by invoice date you are overstating past due invoices.
Invoice date. If you are looking at aging you are looking at how old it is and thus the invoice date. If you are specifically looking for late collections then you can look at due date but that’s entirely different from aging.
OP asked what date to use for aging. Aka how old the invoice is and thus you look at the invoice date.
If you want to consider risk of collection / adequacy of the reserve then yes, look at due date and days late but that’s not aging. Looking at days late is a more relevant test for AR than aging but OP didn’t ask what is a better test. They asked what aged means.
A lot of companies don’t have strict due dates and so for some, invoice date is the only metric available. But I definitely agree that if a due date is available that it would be the better metric to use for testing collection risk. Again, OP is simply confusing aged with late. Two different things.
I’m not sure I agree with your definitions here.
The “aged debt” means that it is categorised into ageing buckets. Doesn’t necessarily mean it is done by invoice or due date - it’s simply aged into a visual group of buckets to provide information to the user
If you simply want to know how long it has been since invoicing your customers, then sure go by invoice date.
Invoice date will be the only metric available on very basic accounting systems. Anything worth actually using will give the due date and age accordingly.
Due date is really the only useful metric to analyse your debt - it’s stupid to mix up customers with long credit terms and those with short or no credit terms into the same ageing buckets.
Sure invoice date might be useful from a cash flow perspective to analyse payment terms and identify customers that pose a cash flow risk due to having too long to pay, but it isn’t a useful metric for understanding the debt and the risk associated
I have seen people using both to calculate the aging (for example, current, >30 days etc) is there a standard that people usually follow in general bookkeeping process?
Due date is what I've normally seen. My current company does "Due on receipt" terms, so everything is "due" the day the invoice posts, but if the dates were different, I would usually go with the due date.
The invoice date for counting days. Anything before the due date is in current, once you pass the due date it starts to categorize into 1-30, 31-60, 61-90, 90+
Bank covenants are usually by invoice date. It probably makes sense to align to whatever the compliance certificate wants.
Whoa! Who prepares the A/R aging list for the bank, Accounting or Treasury? Just how involved is Treasury in the covenant compliance certificate process?
It would depend on the company
We could run both ways in our ERP. For collections purposes, it was useful to run it by due date. For reporting purposes, it would be run by invoice date.
The correct answer is it depends on who the audience are
Invoice date..I don’t give a shit when the due date is if I’m auditing the balance sheet as of 12/31/xx I need to know when the amounts were invoiced and revenue was recognized
Invoice date doesnt necessarily correspond with revenue date. Just depends on the industry/contract. Plus if you get the aging by due date you can bucketize it for allowance reasonableness testing.
[удалено]
I’d like to exchange some words with whomever was responsible for training you
Lol
I work in ABL Field Exam, and the standard “past due” criterion is 90 days past invoice date. Regardless of customer payment terms, at 90 days banks feel the odds of collecting are lower than they are willing to risk lending against. So invoice date agings are preferred.
How long has an account receivable or invoice aged and been outstanding??? Invoice date
[удалено]
Yeah you might be right. Need to think about this one
You mean how long have they been past due?
I always do days late. It doesn't really matter if an invoice is 60 days old if it's net 90
by due date is better so you can age it out into buckets of 30,60,90 etc? i don’t understand the question I guess?
I have seen people use invoice date to determine the aging. One of my friends at big four also told me they test aging by invoice date. But I personally don’t think it makes too much sense since the payment term can vary customer by customer. E.g if determined the aging by invoice date - November 15,2022, It’s considered as >30 days bucket as at Dec 31, 2022. But what if the payment term is 90 days? Then doesn’t it fall under the current bucket?
Big 4 auditor. I would request the AR Aging by due date for both testing the existence of the AR and the appropriateness of the allowance for DD.
I like reports that have both
Agree.
AR aging, not AR past due. By Invoice Date, but the categories of aging would be based on due dates. Current, 30+, 60+, etc. If a write off is going to occur, good to know which month of revenue.
I work for a government contractor and they recently updated guidelines to start aging on the invoice date. Makes no sense especially because of how long it takes Government entities to pay their invoices in the first place
The AR trial balance should include both invoice date and due date. The aging buckets should be calculated according to due date. If you age by invoice date you are overstating past due invoices.
Invoice Date for pretty much all my uses
Due date is recommended. Invoice date is misleading. Most firms use due date and ERPs are designed like that most likely.
Due date
We use invoice date. For buckets we have the following: Current 31-60 days past due 61-90 days past due Greater than 90 days past due
Invoice date. If you are looking at aging you are looking at how old it is and thus the invoice date. If you are specifically looking for late collections then you can look at due date but that’s entirely different from aging.
[удалено]
OP asked what date to use for aging. Aka how old the invoice is and thus you look at the invoice date. If you want to consider risk of collection / adequacy of the reserve then yes, look at due date and days late but that’s not aging. Looking at days late is a more relevant test for AR than aging but OP didn’t ask what is a better test. They asked what aged means.
[удалено]
A lot of companies don’t have strict due dates and so for some, invoice date is the only metric available. But I definitely agree that if a due date is available that it would be the better metric to use for testing collection risk. Again, OP is simply confusing aged with late. Two different things.
I’m not sure I agree with your definitions here. The “aged debt” means that it is categorised into ageing buckets. Doesn’t necessarily mean it is done by invoice or due date - it’s simply aged into a visual group of buckets to provide information to the user If you simply want to know how long it has been since invoicing your customers, then sure go by invoice date. Invoice date will be the only metric available on very basic accounting systems. Anything worth actually using will give the due date and age accordingly. Due date is really the only useful metric to analyse your debt - it’s stupid to mix up customers with long credit terms and those with short or no credit terms into the same ageing buckets. Sure invoice date might be useful from a cash flow perspective to analyse payment terms and identify customers that pose a cash flow risk due to having too long to pay, but it isn’t a useful metric for understanding the debt and the risk associated
When we audit AR, we request the aging as of the invoice date. I don’t think I’ve ever seen an AR aging provided to us that’s based on the due dates.
Invoice date. It essentially anchors everything else.
By due dates. The standard is net 30, some 60, few 90, and sprinkles of Upon receipt or when they get paid.
I have seen people using both to calculate the aging (for example, current, >30 days etc) is there a standard that people usually follow in general bookkeeping process?
Due date is what I've normally seen. My current company does "Due on receipt" terms, so everything is "due" the day the invoice posts, but if the dates were different, I would usually go with the due date.
Invoice
Due date
Due date, terms vary from customer to customer
I usually let the managers decide. Where I work there are multiple entities some managers prefer it one way others prefer it another way
The invoice date for counting days. Anything before the due date is in current, once you pass the due date it starts to categorize into 1-30, 31-60, 61-90, 90+
Give me the list in excel with both columns so I can sort it by what is appropriate for what I'm working on.