An aging report is also known as an accounts receivable report for aging. It’s a simple tool that tracks unpaid invoices and how long they’ve been overdue. It shows which customers owe you money and how long they’ve been late. Breaking down overdue amounts by periods (30, 60, and 90 days past due) gives you a clear picture of your financial health.
Similarly, this report is great for finding patterns, such as customers who always pay late. With that information, you can take steps to prevent future delays, such as sending reminders, imposing stricter payment terms, or offering easier payment options. In this guide, we’ll explain the aging report in medical billing, its benefits, and its importance. Stay with us until the end to gather interesting and valuable information!
What Is an Aging Report?
Accounts receivable aging is a report that categorizes accounts receivable by the number of days the invoice has been outstanding. It is used as a yardstick for evaluating the credit risk of customers to a particular firm or business organization.
Furthermore, the aging of accounts receivable reveals that a company’s receivables are being collected much slower than usual. This may be a sign that business is slowing down or that the company is assuming higher credit risk in its selling strategies.
What Is an Aging Report in Medical Billing?
AR follow-up in medical billing is so significant for successful healthcare revenue cycle management. AR aging in medical billing has a direct effect on the revenue of healthcare providers and practices.
It will also help in cutting down revenue loss while enabling healthcare providers to follow the cash flow rate necessary for distinguishing between paid and unpaid claims. In addition, effective AR management also improves the total RCM performance.
AR follow-up in the medical procedure is a methodical process with three steps, which include:
1. Initial Evaluation
2. Analysis and Prioritizing
3. Collection
Types of Aging Reports
1. Accounts Payable Aging Report
An accounts payable aging report is an essential business document that shows a business’s outstanding bills and invoices, along with the vendors and their due dates. It also shows the columns Current, which are the amounts and the number of days past due in ranges, and the total amount.
An AP aging report details invoices with reference numbers, due dates, payment terms, and balances due. An aging accounts payable report is equivalent to an aging accounts receivable report, which shows when a business can expect to receive payment from its customers.
2. Accounts Receivable Aging Report
An accounts receivable (AR) report for aging shows how long a particular invoice has been outstanding and is a critical report in the management of cash. It categorizes unpaid invoices depending on the number of days they have taken, which is usually done in 30 days (0-30 days, 31-60 days, etc.).
In addition, an aged receivables rep is more commonly available. These reports provide details of all outstanding invoices, including customer information, amounts due, and days outstanding.
Importance of Account Receivable Aging Report
The accounts receivable aging report is a report of your unpaid customer invoices. In addition, the accounts receivable report aging is a report of the unpaid bills from customers who owe your business money. In the blink of an eye, you can determine which payments and how much more time you can afford to wait for outstanding payments. So, here are ways an AR aging report for aging helps:
- Evaluate credit terms and collection functions.
- Detect abnormalities in collection processes.
- Prevent financial pressure scenarios in your firm.
- Identify and address consumers who consistently make late payments to prevent future issues.
- Determine whether to withhold services or products until the consumer settles pending payments.
- Analyze client behavior, follow up as needed, and adjust invoice timeframe to ensure timely payment.
Steps involve in Account Receivable Aging Report
An aging schedule summarizes all your customer’s aged receivables in 30-day intervals. The time brackets can range from 1 to 30 days, 30 to 60 days, 60 to 90 days, and so on.
Follow these instructions to start developing a simple report for aging:
- Step 1: Review all open bills.
- Step 2: Organize invoices by client to view those sent at various periods.
- Step 3: Using your maturing schedule, categorize open bills by date.
- Step 4: To arrange your age receivables, sort the client list by outstanding period and total due payment.
Aging Report in Medical Billing Example
Here are a few examples that include:
- The largest portion of outstanding payments is from insurance companies in the 91+ days category.
- Patient responsibility accounts for smaller amounts but may require follow-up for quicker resolution.
- Payments in the 61–90 and 91+ days categories may need immediate attention to reduce the risk of denials or write-offs.
Account Payable Vs. Account Receivable
Account Payable | Account Receivable |
Money a company owes to suppliers or vendors for goods/services. | Money customers owe a company for goods/services provided. |
Tracks payments due to suppliers/vendors. | Tracks payments from customers. |
Cash flows out when paying bills. | Cash flows in when receiving payments. |
The liability side of the balance sheet. | The asset side of the balance sheet. |
Utility bills, rent, inventory purchases. | Customer payments for sold products or services. |
Information Includes in an Accounts Payable Aging Report
An accounts payable aging report is a complete report on the aging of invoices that suppliers have not paid. All lines of the invoice bear the invoice number, invoice date, payment terms, and due date where the payment terms require it.
The first column is Vendor Name. Accounts payable report column titles for current, past-due aging ranges, and total are:
- 1 – 30 days
- 31 – 60 days
- 61- 90 days, and
- Over 90 days
Benefits of AP Aging Reports
Here are the benefits that can be derived from the preparation of Accounts Payable (AP) Aging Reports:
- AP aging reports assist organizations in monitoring amounts due from vendors. It leads to better cash flow predictions and guarantees to the firm that it will steadily hold enough cash to meet its future commitments.
- Looking at medical billing reports for aging allows various businesses to determine which payments should be made as a priority to avoid incurring penalties from their vendors.
- The reports are most useful in giving information on outstanding payables so that businesses can keep control of their obligations and avert cases where payments go unpaid for a long.
- AP aging reports provide information to negotiate with suppliers for improved terms, control of credit lines, and future expenditures.
- Businesses should frequently check reports for aging to detect problems with their vendors and address them before damaging the business/vendor relationship.
Final Thoughts
The accounts receivable aging report in medical billing is one of the healthcare company’s financial reports. It classifies open accounts receivable or customers with a balance due, which can be identified by the number of days an invoice has gone unpaid. The report often records the number of accounts receivable in 30-day intervals: 0-30 days, 31-60 days, 61-90 days, and more than 90 days.
The A/R aging report is also used to estimate bad debt expenses. Older receivables are more likely not to be collected, so the report assists in determining the allowance for doubtful accounts. Thus, to get proper reporting, front-desk management, and accurate medical billing, stay in touch with MAVA Care. We are here to assist you and tackle all the administrative work.
FAQ’s
What is a claims aging report?
A claims aging report involves a list of unpaid insurance or medical claims sorted according to the number of days they have been unpaid (e.g., 0-30 days, 31-60 days, etc.). It assists organizations in tracking due receivables and generating ideas about probable collection problems or processing problem areas.
What are the two types of aging reports?
The two most common forms of aging are DOS, which ages the claims based on the date they were rendered, and DOS, which ages the claims depending on the date they were submitted to the payer/insurance company.
How to prepare a debtor aging report?
To prepare a debtor aging report, all outstanding customer aging invoices should be categorized according to time. It depends on the due date and then sums the total each time to show the total outstanding debt and the total amount owed.
What is aging analysis?
Aging analysis is a tool in financial accounting that groups accounts receivable or payable that have not yet been collected or paid depending on how long they have been overdue. It assists in monitoring overdue balances, evaluating collection hazards, and controlling cash flows.
How to write a patient care report?
A patient care report should include the patient’s vital signs, presenting complaint, treatment offered, findings, and response to the treatment. It should also include SOAP (Subjective, Objective, Assessment, Plan).