Happy Republic day to all our Indian readers.

You saw some basic reports of an Ageing Analysis.

https://faoblog.com/processes-ar-collections-ageing-analysis-3

 

Now, today let us look at some reporting parameters, which make an “Ageing Analysis” effective.

You can structure your reports on various parameters within each defined bucket as well:

  • Geographical – splitting the reports by geography really helps adding a strong component for the collections teams.
  • Nature of delinquency – If you saw the 2nd report, giving level 2 details of the outstanding bills, there were a number of items, which needed internal resolution, i.e. at your client’s end. There were just 2 items for collections follow up. This category can also be clubbed with the geography in some mid-size clients, where the legal, sales, accounts can be classified as a geography value. Ideally for large clients, this cannot be resorted to.
  • Risk factor – You can assign a risk factor, based on how difficult the recovery might be.
  • Value of invoice – higher value recoveries may need a stronger focus.
  • Relationship factor – During your analysis you find that a customer who was extremely good at payments starts to default.
  • Industry factor – You may also segregate the receivables by the business industry. This is not really a strong parameter, however helps sometimes. A particular industry is facing a recession, so collections will be a difficult proposition and more follow up will be needed.

Thus the reporting will need to be developed based on the needs and the situation of your client.

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