AR Aging Concept

The following parameters are referenced in this algorithm:
Age Method:There are three aging methods: Due Date, Statement Date and Reference Date. This method is defined on the AR General Information (ARUPGN) page. If the Age method is by Due Date or Statement Date, and the transaction does not have a Due Date or Statement Date, the Reference Date will be used instead.
Age Buckets:Use specified aging buckets (e.g., 30,60,90,120, etc.). Up to 10 aging buckets may be specified.
AsOf Date:Transactions beyond the AsOf Date will be ignored. This date is also used as the base date for delineating the Age Buckets.
Common code ARRE/AR100 may help customize aging.

Aging Algorithm

The following will be done to each transaction whose date is less than or equal to the AsOf Date, and has passed both Selection Criteria and User Security:

• Change the transaction type to be a positive CR if the transaction is a negative AR.
• Compute the number of days between the transaction date and the AsOf Date.
• Update the appropriate sub-bucket based on the transaction type, sign, and age.

For each Age Bucket, three sub-buckets are maintained:

1. AR
2. Positive CR (Normal Payments)
3. Negative CR

Aging Example

For example, given five transactions:

1. AR for $100 on January 29, 1992
2. AR for $200 on January 30, 1992
3. AR for $-50 on February 10, 1992
4. CR for $150 on February 28, 1992
5. CR for $-150 on March 1, 1992

With an AsOf Date of 3/31/92 and standard aging buckets of 30,60,90, and 120, after all transactions have been read:
The -CR sub-buckets are applied to the +CR sub-buckets in the following manner:

• All -CR amounts in the "0-30" bucket are applied to the +CR amounts in the "0-30" bucket, then, the "31-60" bucket, then the "61-90" bucket, etc. until -CR amount in "0-30"=0.
• Next, all -CR amounts in the "31-60" bucket are applied to the +CR amounts in the "31-60" bucket, then the "61-90" bucket, etc. until -CR amount in "31-60"=0.
• This is repeated for the remaining buckets.

The CR buckets are applied to the AR buckets:

• The AR amount in the "Over 120" bucket is reduced by the CR amount in the "Over 120" bucket, then the "91-120" bucket, then the "61-90" bucket, etc. until the AR amount in the "91-120" bucket =0.
• This is repeated for the remaining buckets. Note that the CR amount is reduced by the amount of the CR applied to the AR.

Finally, we calculate the net for each bucket by subtracting the CR amounts from the AR amounts, giving:

Programmer Note

The source for these calculations is in AR805C. You should be aware, how that CR transactions, while entered as positive values on Data Entry Pages, are actually stored as negative. ALL of the preceding examples are from the user perspective, that is, normal CR's are positive. The actual routine, of course, knows that normal CR's are negative, so be sure to flip the signs of the CR transactions in this document if you are trying to match this algorithm to AR805.