Cash & working capital
Accounts receivable aging (AR aging)
An accounts receivable aging report groups unpaid customer invoices by how long they are past due, so you can see which money is at risk of never arriving.
Each open invoice is placed in a bucket by days past its due date: current, 1–30, 31–60, 61–90 and over 90 days.
Worked example
| Current | $120,000 |
| 1–30 days past due | $50,000 |
| 31–60 days | $20,000 |
| 61–90 days | $6,000 |
| Over 90 days | $4,000 |
$30,000 of $200,000 (15%) is more than 30 days late, and the $4,000 over 90 days deserves a call today.
Why it matters
The older an invoice, the less likely it is to be paid. Aging turns "receivables look fine" into a list of which customers to chase, in order.
Common mistakes
Where it misleads
Aging from the invoice date instead of the due date, which makes customers on long terms look late.
Forgetting unapplied payments and credit notes, so a customer who has paid still appears overdue.
Looking only at totals: one large customer in the 61–90 bucket matters more than many small ones.
Related terms
Keep reading
- Days sales outstanding (DSO)Days sales outstanding is the average number of days it takes a company to collect payment after a sale on credit.
- Days payable outstanding (DPO)Days payable outstanding is the average number of days a company takes to pay its suppliers after receiving their bills.
Stop calculating it by hand.
Dear CFO keeps your statements, forecasts and metrics current from the systems you already run.