When it comes to handling your accounts, you could be forgiven for being confused by some of the terminology involved. However, in many cases fairly common and straightforward aspects of your business can be easily understood by demystifying key terms.
In this guide we look at the aged debtors report and what this is able to show you about your business.
What is a debtor?
First of all, it’s important to be clear on debtors and creditors. A debtor is someone who owes you money – i.e. your customers and clients. A creditor, on the other hand, is someone who has leant credit to another person and is owed money – i.e. a bank or lender that you have borrowed from.
By keeping this debtors definition in mind, it makes understanding your aged debtors report simpler.
The aged debtors report
An aged debtors report outlines three things:
- Which debtors owe your company money
- How much your debtors owe
- When they are due to complete their payment
It’s handy to have this information to have to hand as it will help you to identify any issues with cash flow that you need to address. You might also need to show this information when applying for a loan from a bank, for example, as they might want to see that you’re not having trouble getting money in from your debtors.
The aged creditors report
Unsurprisingly, you can also run an aged creditors report, to see how much money you owe to suppliers, for example. See our post on this for more details about the aged creditors report.
Related: financial reporting doesn’t need to be difficult. Find out how to keep HMRC happy with your VAT returns with our free eBook, available to download now