8 accounts receivable reports and how to use them

Accounts receivable is a critical business function, and running it efficiently can fuel your working capital position. These accounts receivable reporting tips will help you get the information you need to make improvements to the way you manage AR.

Listed on the balance sheet as a current asset, accounts receivable (AR) is the total value of invoices outstanding. In other words, it’s money owed to a business from its customers’ credit purchases.

The value locked up in these invoices turns from an asset into available cash when paid. But before then, their value isn’t typically accessible. And accounts receivable can represent a significant portion of a company’s total working capital.

Efficient payment collection enables companies to unlock this cash more quickly, improving their ability to build resilience, prevent bad debt, and foster growth in the short to medium term. But to improve the efficiency of your accounts receivable process, you need better visibility over it. Focusing on strengthening how you report on AR can streamline the process and identify potential weaknesses.

What is an AR report?

Accounts receivable reports (AR reports) are used to detail various aspects of a company’s accounts receivable position. AR reports offer visibility over invoices and customer payments, including invoices sent, amounts outstanding, payments received, credit levels, and refunds due. You can use this information to gauge the efficiency of your credit control and collections processes.

Types of AR reports

Like any process, AR can be reported on from diverse perspectives. There are a variety of common AR reports that can prove insightful, including:

Aging reports

One of the more commonly used AR reports, the aging report, shows how much revenue is outstanding and how long different invoices have been outstanding. Unpaid invoices can be categorized by time intervals, such as:

• Not yet due
• Up to 30 days past due
• 31-60 days past due
• 61-90 days past due
• Over 90 days past due

This approach allows you to determine which invoices need to be paid soonest. As such, aging AR reports are useful in identifying late-paying customers, highlighting working capital issues, overseeing customer credit quality, and setting credit policies.

Receivables by customer

Receivables by customer reports display outstanding balances by the customer rather than by invoice. This type of AR report can show invoices awaiting payment, paid invoices, and orders not yet invoiced. It may also provide detailed information on each customer, such as credit limits, discounts, currency preferences, and payment history.

You can use this type of AR report to identify the reliability of different customers. This can help you manage your customers more effectively and decide which ones should be offered, customized or bespoke arrangements.

Cash flow forecasting reports

Cash flow forecasting reports are integral to AR reporting and should be carried out consistently. Cash flow forecasting can be used to analyze the effectiveness of collections efforts by showing expected flows in and out of the business over a given period.

An accurate cash flow forecast statement offers insight into predicted cash balances and expected cash needs. You can use this information to minimize the need for cash buffers to cover unexpected expenses, meaning you can make better use of excess cash.

Customer credit reports

Customer credit reports provide detailed insights into customers’ creditworthiness, highlighting risks you should be aware of. They can help you make informed decisions about extending credit lines, limiting credit risk, and guiding your general customer management strategy.

Credit reports are most effective when carried out regularly to identify changes to a customer’s creditworthiness over time.

Transaction reports

Accounts receivable reporting can also include transaction reports, which are used to track the transaction history of customers’ invoices. Forming a crucial part of the accounts receivable audit trail, transaction reports typically include the billed amount, the current balance due, and all payments applied to the invoice.

Since they include any invoice adjustments that might be made, you can also scrutinize transaction reports to identify shortcomings in your invoicing processes and/or issues with product fulfillment.

Payment reports

These AR reports record the payment details for each customer, showing open invoices, invoices paid, and part payments. Invoices can be tracked by number and date range, as well as by currency and payment method.

Essential for accurate record keeping and tracking customer payments, this method of AR reporting allows you to stay on top of customer payments and maximize accounts receivable oversight. Payment reports can also highlight customers who pay promptly and persistent late payers.

Cash reconciliation reports

Cash reconciliation reports summarize payments received, refunds due, and credit remaining. They can be used to ensure that cash and revenue balances are reported accurately, that business operations are functioning properly, and that the company is collecting on all sales.

They also help you better understand your cash position, meaning you can make better-informed decisions.

Sales reports

Sales reports can identify your most profitable products and those with the highest number of complaints and returns. They can be used to track sales KPIs, such as the number of sales made and revenue generated, as well as customer lifetime value (CLV) – a measure of the average revenue and net profit generated through a customer relationship.

By providing insights into performance and market trends, sales reports enable businesses to improve their products and services and identify new opportunities.

How to optimize your accounts receivable reporting process

The diverse range of AR reports highlighted above can all add value to your AR reporting process. But you can optimize it further by taking the following steps:

Clear up data views

Generating relevant AR reports should be a top priority for any business – and that means collecting data that is both clear and easy to interpret. Companies can distribute data more effectively by making data available to all stakeholders on a centralized digital ERP platform and using appropriate permissions to control who can view data.

Choose the right AR reports

Companies should prioritize reports that align with their broader business KPIs and combine reports to gain further insights if necessary. For example, by combining the aging report with the sales report and receivables by customer, companies can identify their top customers in terms of revenue and their promptness when paying.

Automate where possible

Finally, automation can help companies reduce the need for manual input and increase the accuracy of data, as well as ensuring that AR reporting processes are carried out regularly. For example, companies can use enterprise resource planning (ERP) systems and digital AR systems to generate reports automatically, creating more visibility over data and facilitating deeper analysis.

Digitalizing AR management and reporting also often opens up opportunities to use AR financing tools. These allow you to free up cash from within accounts receivable for immediate use, improving your working capital position.