Welcome to the Fit Small Business Xero training course! In this lesson, we’re going to cover how to create an accounts receivable aging report in Xero.
You can follow along on your own Xero account. If you don’t have one already, click here to sign up for a free 30-day trial and follow along below.
To complete this lesson, you can either watch the video below, read through the step-by-step instructions, or do both. Let’s begin!
Why Is It Important to Create an Accounts Receivable Aging Report?
An accounts receivable (A/R) aging report allows you to keep track of unpaid invoices. This report will show you the details of each customer invoice, along with the length of time it has been outstanding. Based on the results of this report, businesses will usually follow-up with customers in one of three ways:
- Resend a copy of the unpaid invoices via email.
- Send a friendly reminder a few days before the invoice is due or after the due date has passed.
- Give the customer a call to remind them about their unpaid invoices.
Why You Should Review your Accounts Receivable Aging Report Weekly
Besides identifying overdue invoices, running your A/R Aging report regularly has the following advantages:
- Gives you the ability to forecast incoming cash flow.
- Provides insight into trends regarding how long it takes a customer to pay their invoices after you provide the goods and services.
- Allows you to quickly zero in on delinquent customers which may require you to take legal action in order to collect payment.
How Do I Create an Accounts Receivable Aging Report?
Follow the steps below to run an accounts receivable aging report.
Note: Assuming that you have created and sent your invoices via Xero, the data for this report is already in Xero. Make sure that you have set up payment terms for each customer so that your due dates are accurate. Be sure to enter customer payments into Xero so that your invoices will be marked as paid.
Step 1 – Navigate to All Reports as indicated in the screenshot below.
Step 2 – Below the Sales group, you will see 3 reports.
To show all available reports, click on the “…” as indicated in the screenshot below.
Step 3 – After expanding the group, you should now see a total of 7 reports.
Xero has redesigned several reports and that is the reason why some reports have the “New” button and some do not. For the purposes of this lesson, we will focus on the 4 New reports only.
1. Aged Receivables Detail Report
This report displays the customer contact, invoice date, due date, invoice number and whether or not the invoice is current, which means it has not become due yet. If the invoice is overdue, it will show the number of days it is past due (i.e. 1-30, 31-60 days, 61-90 days). As we discussed previously, you can use this report to follow-up with customers whose invoices are past due or coming due. Note: You can easily drill down to a specific invoice by clicking anywhere in the invoice row.
Below is a sample Aged Receivables Detail (A/R Aging) report for our fictitious company, Acme Web Pros Plus:
2. Aged Receivables Summary Report
This report is a summarized version of the Aged Receivables Detail report above. It shows the customer contact and a total of all invoices that are current or past due (1-30, 31-30 days, 61-90 days and older). Note: If you want to see the invoice details, you can click on any of the totals in the report to drill down to the invoices that make up the total amount.
Below is a sample Aged Receivables Summary report for our fictitious company, Acme Web Pros Plus:
3. Receivable Invoice Detail Report
This report shows the line by line details of all outstanding invoices, credit notes, overpayments and prepayments. Use this report when you want to see the invoice details for multiple invoices without having to pull up each invoice individually. Note: To drill down on an invoice or credit memo, just click on the item that you wish to see more details for.
Below is a sample Receivable Invoice Detail report for our fictitious company, Acme Web Pros Plus:
4. Receivable Invoice Summary Report
This report is the summarized version of the invoice details report (above). It does not show the line by line detail of each invoice; instead each invoice is summarized on one row and it displays the customer contact, invoice date, expected date, reference information, the outstanding balance, source and whether or not the invoice has been sent to the customer.
Note: To display an invoice or credit memo on the report, just click on the invoice row for additional details.
Below is a sample Receivable Invoice Summary report for our fictitious company, Acme Web Pros Plus:
Each of the reports that we have discussed can be exported to PDF, Excel or Google Sheets. Just scroll down to the very bottom of the report, and click the “Export” button as indicated in the screenshot below:
You can also save the report as a draft, published or custom. Just scroll down to the bottom of the report and click on the “Save as” button as indicated in the screenshot below:
- Draft – This option allows you to create a report that you or someone else can make changes to later on. You might create several draft reports before you are ready to publish them.
- Published – This option is used to save reports when you are finalizing the books for the month or the year. A published report will not change if for some reason the information in the system has changed or updated in some way. You can only publish reports if you have the Advisor user role.
- Custom – Use this option if you want to save the report format so that you don’t have to recreate it each time you run the report. Xero will ask you if you would like to make this template your default.
How to Modify Report Settings
Each of the reports that we have discussed can be modified. To modify the report, follow the steps below:
Step 1 – Click on the “Report Settings” button as indicated in the screenshot below.
Step 2 – The following screen should display as indicated in the screenshot below.
- Date Range – Select the date range you would like to run the report for.
- Ageing By – Select the date that you would like to use to calculate the “age” of the invoice. You can select due date or invoice date from the dropdown.
- Ageing Periods – You can determine the aging “buckets” to set up. For example, in the Aged Receivables Summary report we discussed previously, there are 3 periods set up with 30 days each (i.e. 1-30 days, 31-60 days and 61-90 days).
- Numbers – Select whether or not you want to show decimals on the report or just whole numbers only without the cents.
- Group By – From the dropdown, you can select how you would like to group the info on the reports. The choices here are Contact, Contact Group, Invoice Date, Reference, Invoice Seen, Invoice Sent, Tracking category (i.e. Region).
- Columns – Place a checkmark next to each column that you would like to include on your report. Note: The columns available may vary depending on the report you are running.
- Region (tracking category) – If you have set up tracking categories, they will be listed here so that you can filter these reports to show or hide this info.
- Add a filter – If you would like to filter on any column listed in item F above, you can do so by clicking the “add a filter” button and making your selections.
- Update – Click the “Update” button to save your changes.
That wraps up the section on how to create an accounts receivable aging report. The next lesson in our Xero Training Course will be how to create and manage expense claims. In this lesson, we will walk you through how to reimburse an employee or an owner for out of pocket business expenses. To access this lesson or any of the others in the series, click here. For a free 30-day trial of Xero, click the link below.