Saturday, 16 August 2014

Aged Creditors and Debtors

Keeping on top of your cash flow is critical, there are two reports which allow you to control your cash flow.

Creditors are the people to whom we owe money for goods and services supplied by them to us on credit. Debtors are the people who owe us money for goods or services we have supplied to them. They are our debtors. It is quite easy to mix up the terms, and get them the wrong way around, especially as they are “relative” terms – for example, I am a debtor to my creditors! To learn these terms – start with credit. You buy on credit, therefore you are a creditor, and the credit purchases that you have yet to pay is part of your liabilities. Individuals and companies that owe you payment are in debt to you, and are your debtors, and consequently constitute part of your assets.

What is an Aged Creditor Report?
This is a report which lists a business’ suppliers and the amounts owed to them. This information should tally with the balance sheet and let’s a business owner know the total amount owed to suppliers as well to them individually and how old the debts are. This information is useful for forecasting cashflow. Used in conjunction with supplier’s statements an aged creditors report can help ensure that all invoices have been received and accounted for correctly.

What is an Aged Debtor Report?
This provides the same information for a business’ customers and tells business owners how much their business is owed in total as well as individually from them. This document is a key tool for credit controllers who are responsible for ensuring customers pay their invoices on time.
An aged creditor is any payments that the company still owe over a given period of time.
An aging creditor report can be produced; it is a list of who your business owes money to and how old the unpaid invoices are.  Other useful information can be obtained from these reports; how much in total you owe suppliers, how old is the debt you owe, how much you owe each supplier.
 Ayden Kelly is a copy editor located in the heart of Crawley, UK. As a copy editor she writes and edits articles about Credit Control and Credit Management in UK, Payroll Service in UK, Part time management acccountant UK, VAT returns, Self assessment tax returns UK etc. She is a leading resource about finding the best Local Accounts Department Service UK.