Smart BI: analyzing data is smart with So Smart!

customer and supplier aging

Collecting, having access to your company's data and being able to read them correctly helps you understand your business's performance and, consequently, make informed decisions. That's why the Power BI app included in the So Smart online management software suite allows you to easily create reports that allow you to monitor important company KPIs.

In fact, there are over 30 reports available that analyze, among others:

  • Customer aging and supplier aging
  • Sales
  • Purchases
  • Inventory

In this first post, we will focus only on the first topic, which is customer and supplier aging.

Customer Aging and Supplier Aging

Customer and supplier aging is a crucial aspect of the financial management of any company. These reports provide a detailed overview of the credits that customers owe to the company (customer aging) and the debts that the company has to suppliers (supplier aging) based on the age of transactions. But why are they so important?

Promptly Identify Liquidity Issues

A clear example of the importance of customer aging is the ability to quickly identify overdue or late invoices. For instance, if a company discovers that an important customer has not paid an overdue invoice, it can trigger a chain of events that include timely communication with the customer, payment recovery, and resource management to avoid liquidity problems. Without customer aging, this situation might not be detected until serious financial difficulties occur.

Optimize Supplier Relationships

In the case of supplier aging, consider another situation: the company may discover that it has overdue debts with a key supplier. This could result in the loss of previously agreed-upon discounts or special terms, harming the company's profitability. However, if supplier aging is monitored regularly, measures can be taken to negotiate new payment terms or make timely payments to maintain favorable supplier relationships.

Optimize Working Capital Management

Customer and supplier aging are also essential for working capital management. For example, if customers are accumulating large amounts of debt to the company, it could become difficult to finance day-to-day operations. On the other hand, if the company is paying suppliers in advance or late, it could have a negative impact on liquidity. By monitoring the Days Payable Outstanding (DPO) and Days Sales Outstanding (DSO) through aging, the company can maintain an optimal balance in working capital, avoiding financial stress situations.

Evaluate the Efficiency of Financial Processes

Lastly, customer and supplier aging can be used to assess the efficiency of the company's financial processes. If consistently high levels of customer or supplier aging are observed, it may be indicative of inefficiencies in billing, collection, or payment management processes. These inefficiencies can be identified and addressed to improve efficiency and reduce operating costs.

In the next post, we will explore how Power BI can help you examine your company's sales data.

So Smart is the online management software that helps you automate processes, monitor real-time data, produce analytical reports, and control compliance. So Smart is the cloud solution accessible from any browser, but you can also access it from your computer, smartphone, or tablet by installing the dedicated app, to monitor and plan your activities at any time. So Smart offers Power BI to analyze sales and purchases trends, inventory, credits, and all the indicators that allow you to make informed decisions.

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