What is the accounts due to aging?
Aging Accounts is a term concerning the amount of time that the company requires to settle the outstanding balances for its creditors and suppliers. Unlike receivables, which is monitored by the time frame that customers accept to remunerate payments for issued invoices, payable aging focuses on how the company determines and manages the repayment of debts owed by the company. The general idea of this aging process is to identify potential problems that could lead to the assessment of late fees and other fees that would increase the expenditure of the company and to ensure the payment plan so that as much debt as possible is paid in terms of conditions.
While there are different strategies used to manage account aging, most companies will structure a process that has two key elements. First, the process must consider the conditions associated with each of the excellent debts. This means knowing which of the suppliers has a 30 -day payment terms and which provides a longer salaryebni period. Using these Terms and Conditions as a base for the organization of a payment plan, the Company can create an ongoing procedure that ensures that payments are issued in a way, so the suppliers receive them in time to be accepted and sent to their accounts within the payment terms. This means that no late fees or additional interest fees are applied to account balances, which will effectively save the company's money.
The second aspect of aging paid account accounts must be borne in mind when designing a payable plan, it is necessary to balance due levels with the inventory completed. This simply means that payments are issued to dealers in accordance with the sale of the completed stock, so the money from the sale can be used to settle debts incurred in a business operation. Here it is necessary to pay attention to the negotiation of payment conditions with vendors that are in line with the typical turnover in Vand the sale of finished goods.
In successful management, the aging accounts are minimized by the possibility of transferring a significant debt, which is outside the scope of payment conditions. This in turn helps protect the integrity of relationships with suppliers and enable the company to enjoy favorable credit rating. At the same time, we avoid increasing a large number of late fees or sanctions for these outstanding invoices, which in turn helps maintain the lower limit of society a little healthier.