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Aged debtors analysis

Essentially involves the production of a list of unpaid invoices at a particular point in time. It shows each debtor, with the amount outstanding and number of days outstanding. Debts owed are usually listed in descending order of age and grouped into ageing periods eg 30 days (where the due date is between 1 and 30 days after the invoice date), 60 days (where the due date is between 31 and 60 days after the invoice date), 90 days (where the due date is between 61 and 90 days), 90+ etc. The presence of debtors is to be expected in many businesses, especially in the case of business to business transactions. However, there are negative cash flow and profit implications of overdue payments. Hence, it is vital to minimise the chance of overdue debts and, in particular, bad debts through effective credit control, which should incorporate regular tracking of debtors through aged debtor analysis. See credit control.

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