What is an accounts payable aging report?
An accounts payable (AP) aging report is a document that provides a summary of the bills and invoices a business owes to its vendors and suppliers. This report breaks outstanding transactions down by vendor and due date, helping finance leaders prioritize payments and keep their company’s cash flow in good shape.
Fortunately, best-in-class ERPs like NetSuite offer ready-made AP aging reports that leverage real-time data and automated workflows. Here’s an in-depth explanation of the benefits they deliver and how NetSuite users can generate them as efficiently and accurately as possible.
How AP aging reports help businesses
AP aging reports are a standard component of financial reporting, and they help finance teams manage a range of challenges, including:
Cash flow management
AP aging reports give businesses an at-a-glance schedule of the payments they need to resolve. When they are up-to-date – and ideally based on real-time data – financial leaders can use them to optimize cash flow.
Help finding opportunities for discounts
In some cases, suppliers offer dynamic discounts for early payments. By using an AP aging report, you’ll be in a better position to take advantage of these discount opportunities as they arise.
Late payment prevention
The average business has to wait 59 days to receive payment for its sold goods and services. But since AP aging reports can help finance teams track payment deadlines, your company will be more likely to make payments on time. That’s important because late payments can result in penalties, damage to your business’s credit score and weakened relationships with vendors.
A chance to catch errors
When you or someone else at your company regularly reviews an AP aging report, you’ll be able to catch issues with your invoices right away. That includes errors such as duplicate invoices, incorrectly applied payments and inaccurate invoice amounts.
Who relies on accounts payable aging reports?
AP aging reports play a crucial role in the day-to-day duties of many different internal and external stakeholders. Some people who commonly use these reports include:
- AP staff members. Accounts payable staff use AP aging reports to keep an eye on due payments, set up payments and handle interactions with vendors. By doing so, they can expedite payment processing and protect their relationships with suppliers by controlling days payable outstanding (DPO).
- Financial managers and executives. High-ranking members of your business use AP aging reports to create budgets, predict cash flows and make decisions about the company’s future. The in-depth understanding of payment due dates these reports provide can make it easier for executives to manage cash reserves.
- Auditors. While performing financial audits, auditors use AP aging reports to determine whether or not your company’s accounts payable balance is accurate. By doing so, they can ensure that your business’s financial statements present a reliable view of its actual financial health.
Accounts receivable aging reports vs. AP aging reports
Accounts payable aging reports are a powerful tool, but they aren’t the only type of report finance experts need to understand to manage cash flow. Accounts receivable (AR) aging reports are also valuable tools, but they address fundamentally different business dynamics.
The main difference between these reports is the category of payments they focus on. Of course, AP aging reports are all about the payments your company owes to its vendors. In contrast, AR aging reports deal with customer payments – meaning you’ll see customer invoices that have been billed but not collected.
How can you view an AP aging report in NetSuite?
NetSuite users can use its powerful data management and reporting capabilities to generate quick, insightful AP aging reports in several forms, including:
AP Aging Summary report
NetSuite’s AP Aging Summary report displays the amounts your business owes to vendors for the ongoing billing period and what it still owes from prior billing periods. To view an AP Aging Summary report, select Reports > Vendors/Payables > AP Aging.
AP Aging Detail report
Meanwhile, NetSuite’s AP Aging Detail report shows a more in-depth breakdown of your company’s unpaid bills. With this customizable report, you can see the following sections:
- Vendor. This is the vendor’s legal name along with the balance your company owes them, itemized by transaction and summed.
- Transaction type. This explains the type of transaction you’re dealing with (for example, a bill, deposit or expense report).
- Date. This is the day the transaction entered your system.
- Number. This is the transaction number, specific to the type of transaction in question.
- Due date. This is the day the amount you owed for the transaction became due.
- Age. This is the number of days the transaction is past due.
- Amount due. This is how much you owe, itemized by transaction and grouped by vendor total.
To view an AP Aging Detail report in NetSuite, select Reports > Vendors/Payables > AP Aging > Detail.
Tips on utilizing AP aging reports
Once you’ve opened an accounts payable aging report, what should you do with the information it contains? Your first move should be to look for bills that have been unpaid for more than 90 days. These are your most overdue payments, and addressing them as soon as possible should be your top priority.
From there, continue looking through your report to build a strategy for planning payments. You can prioritize payments by thinking about payment terms, cash availability and vendor importance.
Accelerate your NetSuite AP workflows and more with Zone & Co
NetSuite is a powerful tool that helps streamline and automate AP processes. But with the right integrations, NetSuite users can unlock automation strategies that deliver real-time data and eliminate manual workflows for accounting, budgeting, financial reporting and much more.
Zone & Co SuiteApps like ZoneBilling, ZoneCapture and ZoneApprovals can deliver 80% faster billing process, 90%+ fewer errors related to invoice capture and 100% audit visibility for finance teams. And since these are native SuiteApps, they’ll be housed entirely within your ERP, so you always own your data and compliance with a single source of truth.
Find out more about the advantages that come with using Zone & Co SuiteApps for NetSuite by setting up a demo today.
“I reviewed all the major players in the space, and Zone’s AP automation solutions were by far the most performant. They integrate seamlessly within NetSuite and work so well, you would think they were part of core NetSuite.” – Ryan Maher, Director of Finance and Administration at Amigo Mobility