Info

$100,000

100%

If this firm has a credit period of 60 days, then 25 percent of its accounts are late. Whether or not this is serious depends on the nature of the firm's collections and customers. It is often the case that accounts beyond a certain age are almost never collected. Monitoring the age of accounts is very important in such cases.

Firms with seasonal sales will find the percentages on the aging schedule changing during the year. For example, if sales in the current month are very high, then total receivables will also increase sharply. This means that the older accounts, as a percentage of total receivables, become smaller and might appear less important. Some firms have refined the aging schedule so that they have an idea of how it should change with peaks and valleys in their sales.

0 0

Post a comment