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A/R and Average Days Late

ssolberg

VIP Member
I've been chewing nails trying to understand the calcs used for determining the Average Days Late (as seen via Account Status Summary and recalced by P03830) and have come to a plausible (but not liked) conclusion that I'm hoping someone can confirm. There is a KG document on JDE that explains P03830 but it doesn't answer my question so don't bother looking at it. I also have a call into JDE but they haven't been able to answer either. Here's the details:

My example would be a vendor that shows a Avg Days Late of 23 yet in looking at their summary, they have lots of outstanding invoices anywhere from 30 days to over 210 days for large $ amounts in relation to the entire account. (remember that ADL is a weighted avg based on $). If you only look at the invoices that this vendor has paid (or paid some portion), then the 23 days late seems likely. So my conclusion is that P03830 ONLY looks at invoices that have been paid on, not on any OPEN AND NEVER BEEN PAID ON invoices. True? Seems to make this field unreliable (if you look at my example) because it would be showing someone is fairly good customer (when they pay) but actually a very poor customer because they aren't paying at all! Any thoughts? Any solutions?

Programmer/Developer/Anything-They-Give-Me
World A7.3 11 (quite stable and usually happy)
Attempting CO with Xe, AS/400, V4R5 (not happy)
 

John_Dickey

Reputable Poster
I am thinking that yes, this calculation only looks at invoices that have
been paid.
Think about it - if an invoice has NOT been paid, how do you know how many
days late it will be paid? You don't know, unless you have a magic link to
that customer.
Okay, I suppose you could argue that if an invoice is not paid, but is past
due, then it is a late payment, and you would say today - due date is days
late (weighted by the dollar amount, as you noted). That means your days
late could potentially change each day (which I guess could happen if you
get a payment every day from the customer).
So, from a design point, I can see it making sense to design the calculation
to only include paid invoices. That would satisfy the majority of people, I
think, but there will be some who will disagree with the design (one of the
challenges of using 3rd party software).
Hope that makes some sense.

John Dickey
White-Rodgers IS
(314) 577-1466
 

dale_draper

Well Known Member
That calculation is exactly what I would hope it to be.
An aging with it's aging buckets will tell you that they are not paying.
But if you were hoping to use that number as a single point of reference to
assess your customers, I see your point.

But there can be more to an AR eval.
How much discount does the customer take?
How many credits are given, and for what reasons?
Really, a profitability analysis.

It is (easily) possible to have a customer that purchases 4 X the volume of
another to be less profitable than the smaller customer because of
mismanagement.
 

tpayne

Reputable Poster
My understanding of Average Days Late from ALL the other AR systems I have
worked with is that this is based on the outstanding invoices only, this
being weighted on the amount outstanding.
----------------------------------------------------------
Tony Payne - Senior Systems Analyst
United Musical Instruments USA Inc.
1000 Industrial Parkway
Elkhart, Indiana 46516
Tel: (219) 295 0079 ext. 2337
Fax: (219) 295 8613
Email: tpayne@umi-usa.com
(Running JDE A73 cum 10 on V4R3M0)



I've been chewing nails trying to understand the calcs used for determining
the Average Days Late (as seen via Account Status Summary and recalced by
P03830) and have come to a plausible (but not liked) conclusion that I'm
hoping someone can confirm. There is a KG document on JDE that explains
P03830 but it doesn't answer my question so don't bother looking at it. I
also have a call into JDE but they haven't been able to answer either.
Here's the details:

My example would be a vendor that shows a Avg Days Late of 23 yet in looking
at their summary, they have lots of outstanding invoices anywhere from 30
days to over 210 days for large $ amounts in relation to the entire account.
(remember that ADL is a weighted avg based on $). If you only look at the
invoices that this vendor has paid (or paid some portion), then the 23 days
late seems likely. So my conclusion is that P03830 ONLY looks at invoices
that have been paid on, not on any OPEN AND NEVER BEEN PAID ON invoices.
True? Seems to make this field unreliable (if you look at my example)
because it would be showing someone is fairly good customer (when they pay)
but actually a very poor customer because they aren't paying at all! Any
thoughts? Any solutions?
 

ssolberg

VIP Member
Thanks for the posts. JDE did get back to me and confirm what I said in the original post; Unpaid items are NOT included in the calc. Obviously I'm not the A/R person so I really didn't care which way it went, just so I was sure what kind of calc it was doing. I agree, there can be a strong argument either way but you have to pick one of them when they design! Now that A/R understands, I think it will be fine and they will pay more attention to the aging (that is also shown on the same screen they are looking at for days late) and use the Days Late with reference to "paid invoices", not all invoices. Thanks again and if this was news to anyone else besides me, let your A/R Dept. know!

Programmer/Developer/Anything-They-Give-Me
World A7.3 11 (quite stable and usually happy)
Attempting CO with Xe, AS/400, V4R5 (not happy)
 
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