Accounts Receivable Aging

An AR aging report buckets open invoices by how long they have been outstanding—commonly current, 1–30, 31–60, 61–90, and 90+ days. It is one of the most practical tools for cash collection, credit policy, and allowance for doubtful accounts.

Reading the Aging Report

Each row typically shows customer name, invoice details, and balance by age bucket. Totals by bucket reveal whether collection problems are concentrated or widespread.

Compare aging trends month over month. A growing 90+ bucket signals process breakdowns or customer distress.

Collections Prioritization

Focus effort on large balances crossing into late buckets first. Automated reminders help early buckets; personal outreach matters for strategic accounts and long-overdue balances.

Document collection notes in CRM or billing systems so handoffs between finance and account teams stay coherent.

• Automated reminders at 7, 14, and 30 days past due
• Credit holds for repeat late payers
• Payment plans for distressed but viable customers
• Escalation paths for disputed or legal-risk accounts

Allowance for Doubtful Accounts

GAAP often requires estimating uncollectible receivables. Aging-based percentages—higher rates for older buckets—provide a straightforward reserve methodology.

Write off specific invoices when collection is exhausted, adjusting the allowance accordingly.

Metrics Beyond Aging

Days sales outstanding (DSO) complements aging by measuring collection speed relative to revenue. Improvement in DSO frees cash without growing sales.

Track dispute rates and invoice accuracy—many late payments start as billing errors, not customer unwillingness.

Key Takeaways

• Review AR aging weekly with bucket-level trend analysis
• Prioritize collections by balance size, age, and strategic importance
• Maintain an allowance methodology tied to aging and historical loss rates
• Pair aging with DSO and dispute tracking for fuller insight