Aging Reports for Outstanding Payments in Tally Prime
Managing outstanding payments is crucial for businesses to maintain healthy cash flow and avoid any financial discrepancies. Tally Prime provides a feature known as the "Aging Report" which helps businesses track overdue amounts from their customers and suppliers. This report divides outstanding payments into different age categories, making it easier for businesses to prioritize and follow up on overdue payments. In this article, we will explain how to generate and interpret aging reports for outstanding payments in Tally Prime, along with a real-life example.
1. Enabling Accounts Receivable and Accounts Payable in Tally Prime
Before generating aging reports, ensure that Accounts Receivable and Accounts Payable features are enabled in Tally Prime. These features allow Tally to track the amounts owed by customers (debtors) and to suppliers (creditors).
Go to Gateway of Tally → F11: Features → Accounting Features.
Ensure the option Enable Accounts Receivable and Accounts Payable is set to "Yes".
Press Enter to save the settings.
2. Creating Ledger Accounts for Debtors and Creditors
To track outstanding payments, create ledger accounts for both debtors and creditors. These accounts will help Tally Prime categorize transactions and calculate outstanding amounts.
Go to Gateway of Tally → Accounts Info → Ledgers → Create.
For a debtor (customer), under Under:, select Sundry Debtors and name it (e.g., John Doe).
For a creditor (supplier), under Under:, select Sundry Creditors and name it (e.g., ABC Suppliers).
Press Enter to save the ledger account.
Example: Creating Customer and Supplier Ledgers
Customer Ledger Name: John Doe
Supplier Ledger Name: ABC Suppliers
3. Recording Sales and Purchases for Tracking Outstanding Payments
To generate accurate aging reports, you need to record your transactions involving sales (for receivables) and purchases (for payables).
Recording a Sale (Receivable)
Go to Gateway of Tally → Accounting Vouchers → F8: Sales.
Select the debtor's ledger (e.g., John Doe).
Enter the item sold, quantity, rate, and the total amount (including taxes like GST).
Tally will automatically update the outstanding amount for John Doe in the Accounts Receivable report.
Press Enter to save the sale transaction.
Example: Sale to John Doe
Customer Name: John Doe
Item Sold: Product X
Sale Amount: $1,000
GST (18%): $180
Total Receivable: $1,180
Recording a Purchase (Payable)
Go to Gateway of Tally → Accounting Vouchers → F9: Purchase.
Select the creditor's ledger (e.g., ABC Suppliers).
Enter the item purchased, quantity, rate, and the total amount (including taxes like GST).
Tally will automatically update the outstanding amount for ABC Suppliers in the Accounts Payable report.
Press Enter to save the purchase transaction.
Example: Purchase from ABC Suppliers
Supplier Name: ABC Suppliers
Item Purchased: Product Y
Purchase Amount: $800
GST (18%): $144
Total Payable: $944
4. Viewing the Aging Report for Outstanding Payments
After recording the sales and purchases, you can now generate aging reports to track the overdue payments from customers and to suppliers. The aging report categorizes the outstanding amounts based on the due period (e.g., 0-30 days, 31-60 days, etc.).
Go to Gateway of Tally → Display → Statements of Accounts → Outstanding → Agewise.
From here, you can select Receivables to see outstanding amounts from customers (debtors) or Payables to view outstanding amounts to suppliers (creditors).
Tally Prime will display the aging report divided into different time frames: 0-30 days, 31-60 days, 61-90 days, and more.
Example: Aging Report for John Doe (Receivables)
Customer Name: John Doe
0-30 Days: $1,180
31-60 Days: $0
61-90 Days: $0
Overdue (more than 90 days): $0
Example: Aging Report for ABC Suppliers (Payables)
Supplier Name: ABC Suppliers
0-30 Days: $944
31-60 Days: $0
61-90 Days: $0
Overdue (more than 90 days): $0
5. Interpreting the Aging Report
The aging report is divided into multiple categories that help businesses understand the payment behavior of customers and suppliers. Here's how you can interpret the categories:
0-30 Days: These are payments that are within the due period. You can follow up for payment reminders for upcoming due dates.
31-60 Days: Payments that are 31-60 days overdue. It's crucial to follow up with customers for these outstanding amounts to prevent them from becoming aged further.
61-90 Days: Payments that are 61-90 days overdue. These payments should be followed up immediately as they are now significantly overdue.
Overdue (more than 90 Days): Payments that are over 90 days overdue. These are critical outstanding amounts and need immediate action, such as sending reminders, issuing notices, or negotiating payments.
6. Settling Outstanding Amounts (Payment/Receipt)
Once payments are received from customers or made to suppliers, you can update the outstanding balances in the aging report.
Recording a Payment (To Creditor)
Go to Gateway of Tally → Accounting Vouchers → F5: Payment.
Choose the creditor (e.g., ABC Suppliers) and enter the payment amount.
Link the payment to the relevant bank account (e.g., XYZ Bank).
Press Enter to save the payment transaction.
Recording a Receipt (From Debtor)
Go to Gateway of Tally → Accounting Vouchers → F6: Receipt.
Choose the debtor (e.g., John Doe) and enter the receipt amount.
Link the receipt to the relevant bank account (e.g., XYZ Bank).
Press Enter to save the receipt transaction.
By following the steps above, you can effectively track and manage outstanding payments in Tally Prime using the aging report feature. This allows you to have better control over your cash flow and ensures that overdue amounts are promptly addressed.