Key Takeaways
- AR reports provide valuable insights into a company’s finances, customer debts, and key accounts, helping businesses effectively manage their finances and drive growth.
- AR reports come in various types, such as aging reports, customer reports, DSO based on monthly sales, and more. These reports reveal who owes money and for how long.
- Automating AR reporting through software provides real-time information, efficiency, better data control, drill-down capabilities, and reduced error probability.
Introduction
Effective management of account receivable (AR) is paramount to your business’s financial health and overall performance.
One of the most effective ways to gain insight into your AR performance is by tracking and analyzing various accounts receivable reports. These reports provide valuable information about your customers’ payment behavior, outstanding balances, and overall financial health of your business.
In this blog post, we will explore the key accounts receivable reports that AR leaders should track in 2023. By understanding the purpose and benefits of these reports, you can make informed decisions, improve cash flow, and enhance the profitability of your organization.
What Is an AR Report?
An accounts receivable report is a vital tool that offers valuable insights into a company’s financial transactions related to outstanding revenue, customer debts, and key customer accounts. It provides an overview of the AR position for a given period, enabling businesses to manage their finances.
Accounts receivable reports go beyond providing a snapshot of outstanding revenue. They offer insights into essential metrics that help businesses assess their financial performance. Metrics like days sales outstanding (DSO) and collector effectiveness index (CEI) are often included.
Moreover, accounts receivable reports play a crucial role in identifying and managing bad debt. They enable businesses to track delinquent accounts, flag customers with recurring late payments, and take necessary actions to minimize bad debt and improve collection efficiency.
By leveraging the information provided by accounts receivable reports, businesses gain a clear understanding of their financial position. They can pinpoint areas for improvement and make informed decisions to optimize cash flow and drive profitability. These reports serve as valuable tools for financial managers and executives to monitor outstanding revenue, manage customer accounts, and ensure financial stability and growth.
Types of Accounts Receivable Reports
Accounts receivable teams use several types of reports to stay abreast of collections, cash flow challenges, and invoice disputes. Here are some of the commonly used accounts receivable reports:
- Aging reports
- Customer reports
- DSO based on monthly sales reports
- Aged trial balance
- Customer credit reports
- Transaction reports
- Payment reports
- Cash reconciliation reports
- Sales reports
- Productivity reports
1. Aging reports
These are the most commonly used accounts receivable reports. Aging reports provide details on how much of your revenue is outstanding and what amounts are due by customers. The report segments outstanding receivables into different aging buckets based on the number of days they have been outstanding (less than 30 days, 30 – 60 days, 61 – 90 days, and more than 90 days).
The AR aging report is useful to identify working capital issues, monitor customer credit quality, and set credit policies.
If a large percentage of receivables fall into buckets that indicate accounts outstanding for long periods (e.g. > 60 days), a business needs to rethink its collections strategy and rework its credit policy. It will help mitigate risks and improve its collection strategies to achieve timely payments.
Accounts receivable report example for Aging Analysis generated by HighRadius solution
2. Customer reports
AR teams use a variety of reports to keep track of critical customer accounts and customer payments. Some types of customer reports in AR management include:
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Customer list: This report can give you the complete details about customers including their credit limits, salesperson associated with the account, payment information, currency preferences, geography, discount category, etc.
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Revenue by customer: This report segments customers by the amount of revenue they generate for your business ( < $1 Mn, $ 1 Mn – $ 5 Mn, etc.) This helps you identify who your top customers are and where you should be offering personalized services vs custom services.
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Customer transaction report: The customer transaction report provides you an overview of all the interactions with the customer(s) for a given time period. For example, you could use the report to get an overview of all instances where invoices were sent to customers between January 1 – March 31, 2023. You could also look at customer accounts that have overdue receivables, unapplied cash, etc. for the specified time frame.
Accounts receivable report example for Customer reports generated by HighRadius solution
3. DSO based on a monthly sales report
Days Sales Outstanding (DSO) based on a monthly sales report is a crucial metric for any business that extends credit to customers. It is calculated by dividing the accounts receivable by the average daily sales for the month.
DSO reflects the average number of days it takes for a business to receive payment for goods or services sold, which impacts cash flow and liquidity. By monitoring DSO on a monthly basis, businesses can assess their effectiveness in managing accounts receivable and identify potential cash flow problems.
A rising DSO indicates that it is taking longer for customers to pay their bills, which can signal a need to reassess credit policies or collections procedures. Conversely, a decreasing DSO can indicate improved cash flow and better management of accounts receivable.
Accounts receivable report example for DSO based on monthly sales Reports generated by HighRadius solution
4. Aged trial balance
An aged trial balance lists customers’ accounts receivable balance over a time period so that you can track what is overdue. It can be printed for any date range and contains columns for credit balances, customer contact details, codes, etc.
Aged Trial Balance (Source)
5. Customer credit reports
Customer credit reports provide detailed insights into customers’ creditworthiness. Credit reports generated by AR automation solutions like HighRadius combine data from multiple credit agencies such as D&B, Experian, etc. to provide 360° visibility into your credit risk. The credit reports are auto-updated to reflect the latest news and information about customer accounts. These reports help AR managers make the right decisions on extending credit lines and reduce the business’ credit risk exposure.
Accounts receivable report sample for Customer Credit Reports generated by HighRadius solution
6. Transaction reports
Transaction reports provide details into AR tasks carried out during a time period. These reports include error reports, batch listings, journal entries, etc. Transaction reports are a crucial part of your audit trail for accounts receivable transactions.
7. Payment reports
These reports show payment details including paid invoices, open invoices, part payments, payment dates, payment methods used, etc. for each customer. You can use filters on these reports to track payment by currency, date range, invoice number, etc.
Accounts receivable report sample for Payments Reports generated by HighRadius solution
8. Cash reconciliation reports
The cash reconciliation report shows a summary of payments received, cash applied, unapplied cash, credit remaining, and refunds. It provides an overview of the financial activity at your business and helps provide a picture of your cash position.
Accounts receivable report sample for Cash Reconciliation Reports generated by HighRadius solution
(Representative image – Source)
9. Sales reports
The item sales report helps track revenue, product returns, costs, and profit margins for a given period. This report helps you identify which products have the highest returns or complaints and which are the most profitable.
10. Productivity reports
Productivity reports include reports around exception handling productivity, user productivity based on time spent, collection effectiveness index reports, payment committed vs. payment collected by collector, etc. These reports help AR managers gauge the efficiency of their operations and take necessary corrective actions as needed.
Number of credit reviews processed by Analyst report example generated in HighRadius solution
Other AR reports
There are several accounts receivable analysis reports that AR managers use every day to track the efficiency of their operations. Some of the other AR report types include DSO report, credit applications submitted vs. abandoned, customer classification report based on credit risk, top customers by outstanding amount, P2P forecast reports, certificate expiry reports, customer dispute by reason code report, etc. that your team can use for AR reporting.
Other accounts receivable report examples available in HighRadius solutions (Representative image – Source)
Considering that many types of accounts receivable reports are needed to track cash flows and revenue, it is prudent to automate report generation rather than use manual methods.
Choosing an accounts receivable software that supports both out-of-the-box reports and custom reports is crucial to track your cash flow and manage working capital.
Benefits of Automating Accounts Receivable Reporting
AR reports are essential for CFOs and finance leaders to monitor cash flows, working capital, and future cash position. AR managers, collection analysts, and credit analysts rely on these reports for operational excellence and addressing AR challenges. Gain valuable insights with AR reports.
Automatically generating AR reports such as the aging analysis report using AR software is more efficient and reliable than manually creating them using paper & pen or spreadsheets. Auto-generated reports tend to be more accurate and can be shared easily.
Let’s closely explore why auto-generating accounts receivable reports is more beneficial than curating them manually:
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Provides real-time information: Auto-generated electronic accounts receivable reports are updated in real-time and help provide a single version of the information.
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Quick and efficient: Generating AR reports automatically is less time-consuming and tedious than manually building them using spreadsheets or other BI tools.
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Better control over data sharing: You don’t have to send multiple reports to stakeholders manually or worry about sharing confidential data. AR software helps you set permissions and controls over who can view and share AR data.
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Drill-down capabilities: Electronic versions of the AR reports help users to drill down the data for further analysis and get charts and figures automatically.
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Less error-prone: Manually gathering the relevant AR data, running models on it, and creating dashboards has a higher probability of error than when the software auto-generates reports.
How to Automate Accounts Receivable Reporting?
AR software solutions help automate accounts receivable reporting. HighRadius’ AR automation solutions offer a large number of out-of-the-box reports including credit reports, aged debt reports, receipt register portal, and customer reports. Get in touch with our experts to learn more about the out-of-the-box and custom AR reports provided by HighRadius’ solutions – Autonomous Receivables and RadiusOne.
FAQs
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How do you report accounts receivable?
To report accounts receivable, gather information about outstanding amounts owed by customers, create an accounts receivable ledger, categorize the accounts by age, prepare a report that summarizes the outstanding amounts, analyze the report, and take action to collect payments and manage the balance.
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How do you read an AR report?
To read an AR report, review the summary of outstanding amounts owed by customers, including any delinquent accounts. Look for trends or problem areas, such as customers who owe large amounts or who have been delinquent in paying their invoices. Use this information to prioritize follow-up actions and collect outstanding balances.t.
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What are AR documents?
AR documents are documents related to Accounts Receivable, such as invoices, credit memos, payment receipts, statements, and aging reports. These documents are important for tracking and managing accounts receivable, as well as providing documentation of sales and payments for accounting and tax purposes.
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What are the typical accounts receivable reports?
AR reports provide valuable insights into a company’s finances, customer debts, and key accounts. Common types include aging reports, customer reports, DSO, trial balance, credit reports, transaction reports, payment reports, cash reconciliation reports, sales reports, and productivity reports.
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What is the AR aging summary report?
The AR aging summary report categorizes outstanding customer balances based on the length of time invoices have been unpaid. It provides a snapshot of overdue payments and the overall health of accounts receivable. It helps businesses track and manage outstanding debts efficiently.
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What is accounts receivable reporting?
Accounts receivable reporting is the process of tracking and documenting the amounts owed to a business by its customers. It involves generating reports that detail outstanding invoices, payment histories, and aging of receivables.
