3/24/24, 12:15 AM ABKN612 - Aged Receivables & Payables in Xero

EXIT COURSE

Credit Sales and Managing

Accounts Receivable
LESSON 1 OF 15

Learning Outcomes:

List the factors for managing account receivables, effectively.

Summarise the Aged Receivables process, list the reports and explain how to filter the results.

Summarise the Aged Payables process, list the reports and explain how to filter the results.

Explain the process for obtaining the Aged Receivables and Aged Payables balance for your
company, at a given point in time.

Explain what the Cash Conversion Cycle is, and how it relates to both Aged Receivables & Aged
Payables.

Describe the process for running the different cash conversion ratio reports in Xero, i.e. DIO, DSO,
DPO.

Accounts receivable are created when a business provides credit sales to their customers. These credits
need to be managed effectively since they are the funds that run the business.

In other words, Credit sales are sales made 'on account' where customers are allowed to pay for the
goods and services they buy, at a later date. These are non-cash sales.

Most businesses give customers a certain number of days (30 to 60 days) to pay for the delivered

products and services. This is referred to as "extending credit to customers".

Sales made on credit or a sales invoice that your customer hasn't paid yet, are recorded on the Income
Statement and the 'not-yet-collected' money is recorded under accounts receivable in the Balance
Sheet. This means that the income (without actual cash received) and the current assets of the
business increases.

Businesses that extend credit to their customers can expect to get new customers and they also tend to

https://careeracademy.online/pluginfile.php/174431/mod_scorm/content/4/scormdriver/indexAPI.html 1/1