Factoring Companies Guidebook
Due Date Ageing
Definition
Sales ledgers aged by Due Date, rather than the date of the invoice.
Concerns
The concerns for us come from where the DID Client produces a due date ageing of the ledger. The risk being the debt can be financed for up to 180+ days i.e. And invoice can remain in the 'not due' column for up to 90+ days, before moving to the next column ' 30 days overdue' etc.
Identification
Ensure the ageing of the Client's sales ledger is clearly understood and regularly reviewed. Many computer generated ledgers have the ability to switch ledger ageing dates between invoice date and due date, according to the Clients own requirements.
Treatment
Where a due date ageing is submitted we should firstly check if this has been sanctioned. If not, it should be reported on the Audit Report as a serious issue. We should also calculate the real ageing by invoice date and then calculate the necessary reserve. Ideally efforts should be made to get the Client to produce an ageing by invoice date.
