The accounts receivable aging report is one of the most important documents any asset-based lender will ask you for. Well run companies use this report to see which invoices are open and to identify invoices that are beyond terms. It helps them with their collection efforts allowing them to keep on top of slow paying customers. So, why is this report so important for asset-based lenders such as factors? For two reasons:
1. Factoring companies use this report to get an idea of your receivable volume and to determine which receivables will qualify for funding.
2. Factoring companies assume that a company that uses this report and can provide it quickly is likely to manage their receivables well and will likely make a good factoring client.
Item 2 is actually quite important since it’s one way to make a good first impression with a factoring company. Before looking for a factoring company, be sure to have this report handy. By the way, the opposite is also true, factoring companies will become hesitant if you can’t provide this information and still want an accounts receivable factoring proposal.