If you're looking for an efficient way to track your company's expenses, then this is the right article for you! Accounts payable is an accounting term that refers to money owed by a company or individual to suppliers or others who have done business with them. It may also refer to money owed by the company, business owner, or individuals.

Using an accounts payable aging report can help business owners manage their books. It's a valuable tool for tracking the amount of expenses paid versus owed. And, it helps provide insight into when payments are overdue and the steps needed for them to be paid off in full.

How to use an Accounts payable Aging Report in QuickBooks Online

A QuickBooks Online aging report is like having a money management dashboard in your hand. In the next section, we will show you how to set up the aging report. The aging report allows you to view your Accounts payable balance as of any specific day or date (or range of dates). Using the Aging Summary Report below, helps identify accounts payable amounts over 30 days old for your review.

These are the steps you'll need to take to run an Accounts payable aging report:

1) Left-hand side > click on Reports > In the search bar in the upper right-hand corner, type in "Accounts payable" and select either Accounts payable aging summary or Accounts payable aging detail > in this example, we will be choosing the Accounts payable aging summary

2) On the next page > filter for date. For instance, you can choose either "Today" or a specific date range. With date range selected > click "Run Report" located on the right-hand side.

3) To view the amounts owed > click directly on the vendor names or the dollar amounts. For this example >click on "226" owed to "Jennifer Hargreaves."

If you want to change the filters, you can click on the report's gear icon "Settings" at the top right-hand corner. Doing this will open a new window with additional information on the amount owed. Once you've selected your filters, select "Next" again.

4) The last steps include:
-        Saving or exporting the data that you want to analyze
-        Correcting amounts or applying vendor credits, or payments against the amounts
-        Following up with the vendor, paying the vendor, or agreeing to a payment plan

Related Articles: 8 Tips to Improve Your Bookkeeping & Processes for Accounts Receivables

Frequently Asked Questions

What's the value of running an accounts payable report?

The value of running an accounts payable report is that it provides you with a snapshot of your company's financial performance. The aging process, which we will go over below, will allow you to compare the amount owed versus the amount earned. This provides a baseline for outstanding payments and their percentage of revenue and earnings and will enable you to determine if any trends are developing that may be worth further investigation.

From there, it's an easy step to determine if additional steps are needed for payments to be started or if they are overdue.

Are there any risks with not looking at an accounts payable report regularly?

As an owner, an accounts payable report can help you make better decisions about managing your company. There are circumstances where you might owe money that you usually wouldn't notice because you don't have access to reports tracking this data. It's important to note that this is a risk if you don't have the money to pay off your outstanding balances. This is why it's critical that you understand the value of having an aging report.

For example, an aged accounts payable report might show a series of overdue payments or payments held up. This could be for various reasons, one being the late payment fee. It's helpful to understand what is causing these payments to be late or why they aren't paid off on time to avoid incurring additional fees or penalties on your end. If you're looking for ways to save on your business expenses, this can help you determine where you're losing money and how you can avoid it in the future.

What do I need to know before starting an accounts payable aging process?

You want to make sure you understand what the aging process entails and how it will help your company understand your revenue and expenses.

What do I need to know before starting an accounts payable aging process?

You want to make sure you understand what the aging process entails and how it will help your company understand your revenue and expenses.

How often should I run my accounts payable report?

You must run an accounts payable report regularly to know your outstanding balances. Ideally, you would be running an accounts payable report at least once a month to ensure that you do not have too many outstanding payments or pay too much in interest.

Having this information at your fingertips is critical for your company's finances. Ask yourself these questions about your business:

-        Are there any trends of overdue payments or delayed payments?
-        Are any payments being held up?
-        How much are you paying in interest?
-        If there are unpaid balances, have you considered paying them off early to save money on interest costs?

When you are managing a business, it’s important to stay organized. One example of this is the accounts payable aging report in QuickBooks Online, which will let you view your payables status and the amount that the business owes over various time frames. It simplifies everything into a single document—or spreadsheet, as we would usually call it—that shows you how much money your business owes.

Not sure where to start?

Get in touch with us today. We can help you find the answers to these questions and have the correct information to make intelligent business decisions.

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If you don't know your accounts receivable process inside and out, it doesn't matter how good a salesperson you are. You can be on top of your game day in and day out, but until you figure out how to manage the process that comes after the sale, and the bookkeeping that goes with it, you're never going to be able to grow.

When it comes to the accounts receivable process, there are a few things that you need to know about to improve your workflow. Those are:

  1. How Long It Takes You To Get Paid
  2. What your payment terms are
  3. How Much Money Is in the Cycle When It Comes To Getting Paid?
How Long It Takes You To Get Paid

When you're trying to improve your accounts receivable process, the first thing you need to look at is how long it takes for invoices to go unpaid once sent out. If you're in constant contact with customers and customers who have previously purchased from you, you probably know that it takes about 30 days or so for them to pay your bill after the fact.

What does this mean for you? When was the last time that your customers paid what they owed? If you haven't checked in on it in a while, stop and do so now. Has it been more than 30 days since they paid? Then you need to adjust how long the process takes. If it's taking longer than 30 days, you need to try and require that they pay earlier in the cycle. If it's taking less than that, you should probably consider a way to speed the process up.

What Your Payment Terms Are

There are many different kinds of payment terms that you can offer your clients. Some require no money upfront, while others require full payment before any work goes out. Whatever payment terms you decide to go with, it should be something that makes sense based on your industry and what your clients are willing to agree to.

What does this mean for you? The payment terms that you offer should be something that your clients are willing to agree to. If they aren't, you need to think about changing the terms until you find something that both of you can agree with. This is one of those things where if you settle, all parties come out unhappy.

How Much Money Is in the Cycle When It Comes To Getting Paid?

If you're wondering how much money should be in various stages of the accounts receivable process, here is a rough outline:

Invoices – No money should be sitting at this stage at any time.

Credit Card Payments – This depends on your credit card processor. Most chargebacks are handled by the merchant, with the processor handling disputes.

Payment Schedules – This is the timeframe in which payments should be due. It's essential to know your customers and their payment schedules so that you can create a timetable for when their payments should be received.

Payments – Once they're received, this is how much money you get. Some companies may only allow for partial payments or require an entire payment to come in before they pay anything out.

What does this mean for you? If you've been paying your company's bills, you should know how much money is sitting in each of these stages. Once you do, you can work on optimizing the bookkeeping process based on this information.

Luckily, there are some tried-and-true ways to improve your bookkeeping process that anyone can implement with some deep thought and some elbow grease.

Here are Elevate by Welch’s 8 tips to help you get started:

1. Determine the optimal collection process for your business

First, figure out what sort of collection process will work best for your company. Do you need to offer customers a series of payment plans? Will it be better to take a more aggressive stance and set firmer deadlines? There are several factors involved in making this decision, but the most important is your customer base. Are they capable of handling a complex AR system, or is it better to keep things simple? The answer will vary by industry, but most businesses find they can remain competitive with straightforward policies and minimal stress on the AR side.

2. Establish a payment due date

Once you've determined how aggressively to pursue the AR process, the next step is to set a payment due date. This can be helpful if you're offering customers an extension since it will help them understand when they should expect to pay off their balance. You may still wish to provide some payment plan or extension in certain situations, but having an official due date in place can help prevent undue stress for all parties involved.

3. Utilize email reminders when necessary

If your customers fail to make payments by the due date, it's time for a gentle reminder via email. You can't be too pushy or hound your customers via email. However, politely asking for payment by a specific date can be effective at getting some customers to pay up on time. Keep in mind that some customers will need more time, but others are perfectly capable of paying up without much hassle.

4. Offer payment plans when necessary

For some customers, establishing a due date isn't enough to get their payments in on time. If you need to offer payment plans on occasion, don't hesitate to make it clear how these plans work and whether there is any penalty involved if the customer doesn't pay off the balance in the allotted amount of time.

5. Evaluate and adjust your collection process as needed

If you find you need to change your AR collection policy or procedure, be sure to evaluate the situation and make necessary adjustments as necessary. For instance, you may find that a more aggressive approach works better than a more laid-back approach if your customers are slow to pay off their balances. Make the changes accordingly and continue trying new strategies until you find one that works best for your company.

6. Assess your operations with regards to AR processes and controls

As part of an overall systems audit, assessing how effective and efficient the account receivables process is within your company is explicitly also beneficial. What are the strengths and weaknesses of this process? What process improvements can you make to improve collections? By looking at these questions objectively, you can use this information to refine your AR process even further.

7. Automate your AR processes where possible

If you have the resources, it can be helpful to automate your AR collection process as much as possible. This is because automation simplifies the collection process considerably, allowing you to collect payments with ease and ensure that all documentation is readily available for auditing purposes if necessary

Check out some automation tools for this like AR Collect or Chaser

8. Give customers an incentive to pay off their balance.

As a final tip, remember that you can also give customers an incentive to pay off their balance as quickly as possible, so long as it doesn't run afoul of the law. You can offer discounts or other perks for specific customers who are willing to pay off their balance within a specified time frame. This will save you money in the long term, and it's likely to appeal to customers looking for a deal.

Over time, you'll find that your AR management strategy becomes more streamlined and efficient with every improvement you make. This leads to greater profitability over time, resulting in overall business success.

Not sure where to start? Get in touch with us today. We can help you find the answers to these questions and more so that you have the right information to make smart business decisions. Want to know more about hiring an Elevate cloud-bookkeeper and how they can help improve your bottom line - check out Anita's piece here.

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