Cash Flow Woes? How the Accounts Receivable Aging Report Helps Contractors Get Paid on Time

Any business must managing and operating cash flow, but construction contractors must do so even more. With the often-lagging payment cycles, managing accounts receivable (AR) can be a challenging task. That's where accounts receivable aging reports come in. By keeping an eye on these reports on a daily basis, contractors can find issues with unpaid invoices and take care of them before they cause big cash flow problems... In this article, we'll talk about account receivable aging reports, why contractors need them, and how you can use these reports to get paid for your hard work.

Table of contents:

• What is an accounts receivable aging report?

• How do accounts receivable aging reports help contractors maintain healthy cash flow?

• What should contractors do with an AR aging report?

• How to automate your accounts receivable aging reports

• Conclusion

What is an AR Aging Report?

An AR aging report is a document that lists all the outstanding invoices that a contractor has sent to its customers. The AR report provides an overview of how much money is owed, how long it has been outstanding, and how much is overdue.

The AR report sorts unpaid bills by how long they have been overdue. The most recent invoices are listed first, followed by those that are 30, 60, 90, or more days late.

>> Learn more: 4 Easy Steps for Contractors to Create an Accounts Receivable Aging Report [Infographic]

How Do Accounts Receivable Aging Reports Help Contractors Maintain Healthy Cash Flow?

For contractors, operating cash flow is critical, and accounts receivable aging reports are an essential tool for achieving this goal. Here are some ways that the AR aging report can help you spot cash flow problems:

1. Identify late-paying customers:

The accounts receivable aging report can help you identify customers who consistently pay late. This information might help you determine whether to keep working with these clients or adjust payment terms to speed up payment.

For example, you may notice that a client consistently pays invoices 30 days after the due date. This data may help you make informed decisions about payment terms adjustments for future projects.

Learn more: Understand Construction Customers That Don't Pay - How to Deal With It

2. Highlight overdue invoices:

With the accounts receivable aging report, you can quickly see which invoices are overdue. Then you can follow up with the clients to collect the payments. By staying on top of overdue invoices, you can improve your cash flow, and reduce the risk of bad debt.

For example, you may notice that a large amount of your invoices are overdue. This helps you realize that maybe, you need to implement stricter payment terms or offer incentives for early payments. You can also use the AR report to identify the client who ignores the payment reminders to make smart future credit policies.

3. Predict future cash flow:

By analyzing the data in the accounts receivable aging report, you can predict future cash flow and plan accordingly.

For example, if you know that a lot of invoices are coming in the next month, you may need to adjust your spending. This is to ensure that you have enough cash on hand to cover expenses until those invoices are paid.

Learn more: 4 Strategies to Improve Construction Cash Flow

What Should Contractors Do with an AR Aging Report?

To ensure that contractors are getting the most out of their AR aging reports, here are some best practices for operating cash flow:

Review the AR report regularly

It's essential to review the AR aging report on a regular basis. For example, at least once a month, to ensure that potential cash flow problems are identified and addressed in a timely manner.

Prioritize collections efforts

Contractors should prioritize collections. Particularly, focusing on the oldest invoices and collecting them before they become bad debts.

Simplify invoicing processes

Contractors should simplify the invoicing process to ensure invoices are sent promptly and accurately. This can help reduce payment delays and improve cash flow.

Leverage software tools

Contractors may get precise, up-to-date A/R aging reports from software like Sage 100 Contractor.

Learn more: 4 Best Invoicing Software for Contractors and Construction Companies [2023 Updated]

Say Goodbye to Manual AR Reporting: How to Automate Your Accounts Receivable Aging Report

Manual generation of A/R aging reports can be a time-consuming process for contractors. , there are software tools available that can automate the process. Sage 100 Contractor is one such tool that provides accurate and up-to-date A/R aging reports, making it easier for contractors to identify potential cash flow problems and take timely action.

How Can Sage 100 Contractor Help You with Accurate A/R Aging Reports

Sage 100 Contractor is an accounting software designed specifically for the construction industry. With Sage 100 Contractor, you can easily generate the aging report and customize it to meet your specific needs. In addition to the A/R aging report, Sage 100 Contractor offers a range of other accounting tools that can help you manage your cash flow, including:

• Accounts Payable: Manage your vendor bills and payments

• General Ledger: Track your income and expenses and generate financial statements

• Job Cost: Check your project costs and profitability

Achieve Accurate Reports with the Help of AR Services for Contractors

At CCA, we specialize in providing accounts receivable (AR) services for the construction industry. Our team of experts understands the unique challenges that contractors face when managing their A/R.

We work with our clients to provide accurate and up-to-date A/R aging reports, so they can focus on running their businesses. This gives you the insights you need to make informed decisions and take proactive actions to keep your cash flowing in.

By partnering with CCA and utilizing Sage 100 Contractor, you can improve your cash flow and grow your business with confidence. Don't let A/R management hold you back. Let us help you take control and succeed.

In Conclusion,

Managing accounts receivable is crucial for contractors to maintain a stable cash flow. The AR aging report is a powerful tool that can help you operating cash flow. Such as identifying late-paying customers, tracking overdue invoices, and predicting future cash flow.

By regularly reviewing the AR report, prioritizing collections efforts, simplifying invoicing processes, and leveraging software tools like Sage 100 Contractor, you can achieve accurate and up-to-date reports. These best practices, deliver you insights to make informed decisions and take proactive actions to keep cash flowing in.

With the support of CCA and cutting-edge software, contractors can master A/R management and pave the way for business success. Contact us now to manage your A/R efficiently and achieve growth with confidence.