What is an aging report?

In plain English

An accounts receivable aging report shows customers and buckets such as current, 1-30, 31-60 and over 60 days late. A payables aging report does the same for what you owe.

Use it weekly to decide who to call first. Its total should equal the AR or AP balance on the balance sheet.

Why it matters

An aging report turns a long list of invoices into a simple question: who is late, and how late. Money that sits past due tends to get harder to collect over time, so knowing which balances are slipping lets you call early, while the customer still remembers the work and has the funds.

The payables version helps with cash planning. It shows which bills are due this week, which are already overdue, and where you might need to call a vendor to ask for more time. Lenders also request aging reports to judge the quality of your receivables.

Worked example

AR totals $30,000: $18,000 current, $7,000 at 1-30 days, $3,500 at 31-60 and $1,500 over 60. The $1,500 over 60 days is 5% of receivables and gets a call first.

How to handle it

1. Run the receivables aging as of today and sort it by the oldest bucket first.
2. Click into any old balance to check whether it is a real unpaid invoice or an unapplied payment or credit.
3. Contact the customers in the oldest buckets and note the date and outcome of each contact.
4. Run the payables aging before each bill payment run to see what is coming due.
5. At month end, run both reports as of the last day and confirm each total matches its balance sheet line.

Common mistakes

• Leaving unapplied payments and credits floating, so the aging shows customers as late when they have already paid.
• Running the report as of today when reconciling an earlier month, which produces totals that will not match the old balance sheet.
• Looking at the summary only, which can hide one large invoice that is badly overdue inside a customer total that looks fine.
• Using invoice date instead of due date without realizing it, which makes customers on longer terms appear late.

Not the same as: Accounts receivable

Accounts receivable is the balance owed to you. The aging report is the breakdown of that balance by customer and by how long each invoice has been open. See Accounts receivable.

Go deeper

• Accounts Receivable Basics: Track What You're Owed: How to manage accounts receivable: aging reports, payment terms, credit limits and a weekly routine that keeps customer balances from piling up.
• Year-End Accounts Receivable Review and Bad Debts: How to review unpaid customer invoices at year end, decide what is uncollectible, record write-offs and keep the support.

Try it

Use the related free tool.

Related terms

• Amortization: Spreading the cost of an intangible asset, or the repayment of a loan, over time.
• Asset: Something the business owns or is owed that has value, such as cash, receivables, inventory or equipment.
• Accumulated depreciation: The total depreciation recorded on an asset since you started using it, shown as a reduction of the asset's cost.

Common questions

General information, not tax, legal or accounting advice. Confirm rules with the IRS, the NJ Division of Taxation or a licensed professional.