Glossary
Accounts Receivable Aging
Accounts receivable aging is a report that groups a company's unpaid customer invoices by how many days they are past the invoice or due date, usually in 30-day buckets.
An accounts receivable aging report, often called an AR aging or aged trial balance, lists every open invoice and sorts it into time buckets. The most common layout uses current, 1 to 30 days past due, 31 to 60, 61 to 90, and over 90 days. Some companies age from the invoice date and others from the due date, so it matters which method your accounting system uses before you compare reports.
In business-to-business collections, the aging report is the starting point for nearly every decision. Credit managers use it to decide which customers get a reminder call, which get placed on credit hold, and which should be handed to a collection agency or attorney. Because the report shows the customer, invoice number, amount, and age side by side, it also reveals patterns, such as a customer that pays small invoices on time while letting one large disputed invoice sit.
Consider a fictional distributor, Harbor Point Supply, that runs its aging on the first of each month. It sees that a contractor customer has $4,200 current, $6,800 in the 31 to 60 day bucket, and $11,500 over 90 days. The over-90 balance has had no payments and no written dispute. That account goes to the top of the escalation list, and new orders are paused until the oldest balance is resolved.
The aging report matters to a creditor because the age of a receivable is closely tied to how hard it will be to collect. Older debts give the customer more time to run into trouble, change ownership, or close. Reviewing aging on a fixed schedule, and setting clear rules for when an account moves to the next step, keeps old balances from quietly turning into write-offs and helps you act while the debtor is still operating and reachable.
Example
Harbor Point Supply sees $11,500 from one contractor in the over-90 bucket with no dispute on file. It places the account on credit hold and sends a final demand before referring it for collection.