Aging Schedule

What is Aging Schedule?

Aging schedule is typically prepared by an organization’s auditor and it is based on trade accounts receivable. Basically an accounting table that demonstrates the vital relationship between a company’s invoices and bills as well as the applicable due days, aging schedule is generally of immense importance to a company’s sales staff, its source of credit and fundamental analysts.

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Aging schedule, more often than not, is created with the help of an accounting software. It can be created for both accounts receivable and accounts payable, and thus it assists a company to evaluate whether clients/consumers are paying on time. Similarly, an aging schedule also help companies monitor whether or not it is current in clearing due payments.

In addition, an aging schedule also helps companies when it comes to predicting their cash flows. It accomplishes that objective by classifying all pending liabilities by their respective due dates in proper order (from the earliest to the latest) and also by classifying all anticipated sources of income by the total number of days since invoices were dispatched to the concerned parties.

There’s another important use of these accounting tables – apparently, they can also be used by creditors for assessing whether or not it would be wise to lend money to an organization.

Edited and Updated 4th January 2014

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