Aging

Term Definition
Aging is a term used in billing that refers to the number of days an invoice is past due. Aging begins from the due date not the date the invoice was sent. For example, an invoice which was due on July 1 but unpaid by August 1 would have an aging of thirty days.

Organizations use aging reports to track and collect on outstanding bills. Many companies use billing software which automates various degrees of the billing process. The billing system can be set up of rules around aging. For example, all bills with a 30-day aging could be automatically re-billed. Companies must have efficient systems in place to process invoices that are accurate and timely. They must also have systems for collecting and posting revenues. Billing backlogs can interrupt cash flow and inaccurate bills can not only irritate customers but could cause compliance violations.

Professional service organizations have unique needs around billing. There may be a need for multi-currency, multi-client invoicing, chargebacks, money charges, split bills, cost plus bills and more. Thus, a system must enable real-time entry of hourly, fixed, flat charge, prorated and daily pay and billing rules based on users, clients, projects, tasks and dates, with or without dependencies. The engine also supports cost plus, split billing and recurring rate rules. Additionally, professional service organizations may require transaction and item/cost billing, automated billing of non-time related items such as project overhead, bonuses, interest charges, discounts, subscriptions, licenses and equipment sold. This would allow billable charges to be included in an invoice of chargeback. Batch invoicing and chargeback would allow multiple invoices to be generated in a single operation which would free users from the time-consuming and error-prone task of invoicing client-by-client or project-by-project, allows invoices to be reviewed and approved as a group, and permits the entire batch to be exported to the organization's financial system in one step.

Area of Application
Project Management

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