Age analyses - clients and suppliers
ID:CVAGAN

Video Overview

When we work with clients and suppliers, we open up accounts for them in our books. These are the debtors control and creditors control accounts that we work with. But when we work with client accounts, we may not receive payment as speedily as we would like, therefore, when we open accounts for clients, we set the terms of the account. Terms refers to the amount of interest that will be charged should an account become overdue. When we specify in the terms what rate of interest we will charge, we will also specify what constitutes overdue. Usually, an account is seen as overdue when it has exceeded 30 days. Likewise, when we open accounts with our suppliers, we need to read the terms and conditions stipulated by them to avoid paying interest. We want to make sure our payments are up to date and avoid the sometimes unnecessary expense of paying interest.