Unpaid invoices and outstanding bills: find out who you owe and who owes you

Unpaid invoices will throw a spanner in the works of your delicately maintained cashflow - and surprise bills can do the same. But what’s the best way to keep an eye on them, alongside all the rest of your work?

FreeAgent has two reports that are built for this: Aged Debtors and Aged Creditors. In this guide, you’ll discover where to find these reports, how to use them, and which big questions they can help your business answer.  

What on earth is an Aged Debtors or Aged Creditors report?

They sound complicated, but don’t let their technical accounting names put you off! In fact, these are two really handy reports that show you details about the money you owe and are owed. 

The Aged Debtors report shows you a list of customers who owe you money, broken down by the date you issued the unpaid invoice (or invoices). It makes it really easy to see, at a glance, how much your business is owed… as well as who owes you the most, and how long they’ve owed you money. 

The Aged Creditors report, on the other hand, is an important list that shows who you owe money to. You’ll see supplier names against the total you owe them and how long it’s been since you received the bill or bills. 

How do I use my Aged Debtors and Aged Creditors reports?

In an ideal world, both these reports will be empty - your business having paid its debts and been paid for all its issued invoices. But, the world is often less than ideal and payment deadlines slip. So it’s a good idea to check these reports once a month to make sure you’re in the green.  

In FreeAgent, that means heading to your Reports section and finding these two reports in the list under ‘Breakdown’. 

Once you’re in each report, you’ll see the total owed to each supplier (creditors), or by each customer (debtors). Each total owed is also broken down by how overdue each payment is, from less than 30 days to over 90 days.

You can choose whether the report calculates overdue payments from the date the invoice or bill was issued (bill date/invoice date), or from the date the invoice or bill was due (due date). 

I’ve checked my Aged Debtors and Aged Creditors reports. What should I do next?

If you’ve got any overdue invoices, you might want to send out some chasing emails (we have templates if you want inspiration). Or you might have already set up some automatic invoice reminders to do this for you! 

If you have some outstanding bills, you might be able to pay them outright - or, if your cashflow is tight, you might want to contact your supplier to negotiate. You might be able to agree an extension to your payment deadline or to pay in two parts - but being proactive and transparent will always build more trust than ignoring the problem or forcing your supplier to chase you. 

What questions can Aged Debtors and Aged Creditors reports help me answer?

Do I need to reconsider any of my customer relationships?

If you have certain customers who owe you a large amount, or have invoices overdue by more than 90 days, you might want to assess whether those relationships are still positive for you.  

If you discover a pattern of a customer paying you late, you might need to have a conversation to find out why they’re struggling to meet your deadlines. Or you might decide that their business isn’t worth the increased uncertainty, and choose not to accept work from them in the future. 

Should I change my payment terms?

Your payment terms tell your customers when and how they must pay you. Seeing lots of customers on your Aged Debtors report could suggest there’s a problem with your payment terms. 

You might be able to avoid overdue invoices by making changes like:

• making sure any new customers sign a clear agreement for when and how they will pay
• shortening your payment terms to 30 days, if you previously offered 60 days
• reiterating your payment terms clearly in your invoice emails and reminder emails
• offering a clear payment method - like adding a ‘Pay now’ button to your invoices

By changing your payment terms and making these crystal clear to your customers, you could get paid faster.

Do I need to improve my cashflow?

If you’re struggling to pay some bills on time, you might need to look at your cashflow. Are there particular points in the year when you have lots of outgoings, like maybe when your tax bill is due? Taking note of these and planning ahead can help with pinch points. 

Late invoice payments can also hurt your cashflow - because if your customers don’t pay you, you can’t pay your suppliers. So, fixing your payment terms and setting up automatic late payment emails can really help. That’s why it’s best to look at your Aged Debtors and Aged Creditors reports together - they’re often more interlinked than you think!

Should I pay certain big bills annually or monthly?

Some suppliers and services will give you the option of paying annually or monthly and it isn’t always obvious which one is best for your business. For instance, you might pay less overall annually, but not always have enough cash on hand to pay one large sum. Looking at your Aged Creditors report - along with your Cashflow report - can help you decide whether your business is better off paying small amounts monthly or settling up once a year. 

Smarter business decisions are just a report away…

Take care of the daily admin and FreeAgent will handle the rest. Connect your bank feed and add invoices, bills and expenses, while FreeAgent creates the detailed reports you need to understand your business health.

Using the data you enter throughout the year, FreeAgent builds the following reports in real time: 

• your Profit and Loss report
• your Balance Sheet report
• your Aged Debtors report
• your Aged Creditors report

You can learn more about FreeAgent’s Aged Debtors and Aged Creditors reports in our Knowledge Base.