What the report shows
The report lists each customer and the amount they owe, split into columns such as current, 1 to 30 days past due, 31 to 60, 61 to 90 and over 90. The total should match the accounts receivable balance on your balance sheet.
If the two do not match, there may be unapplied payments, credits or entries posted directly to receivables. Fix that before relying on the report.
Reading the buckets
Current invoices are not yet due. Invoices in the first overdue bucket are usually just late, and a friendly reminder often solves them. The older an invoice gets, the less likely it is to be paid in full, so each step to the right deserves more attention.
Look at the percentage of the total in each bucket. A growing share in the older columns is a warning even if the total looks stable.
Look by customer
Check which customers appear across several buckets. A customer who is always 30 days late may simply have slow processes. A customer who stops paying while ordering more is a risk, and it may be time to pause new work until they catch up.
Large balances from one customer also concentrate your risk. Know how much of your receivables depend on your top few customers.
Action for each group
For current balances, send invoices promptly and make due dates clear. For slightly overdue ones, send a polite reminder with the invoice attached. For older balances, call, agree on a payment date and confirm it in writing.
For very old balances, decide whether to continue collecting, offer a payment plan or write the balance off. Write-offs should follow a clear policy and be recorded properly.
Make it a habit
Review the report weekly or at least monthly. Keep notes on promises to pay and follow up when they pass. Compare the report to your days sales outstanding to see whether collections are getting slower.
Good habits at the start, such as clear terms, deposits for large jobs and prompt invoicing, reduce the number of invoices that reach the older columns.
A short example
Suppose total receivables are $50,000: $30,000 current, $10,000 at 1 to 30 days, $6,000 at 31 to 60, $3,000 at 61 to 90 and $1,000 over 90. Sixty percent is current, but 20% is already more than a month past due.
Look at the biggest overdue accounts first. A $4,000 invoice at 45 days overdue is worth a phone call today. A $200 invoice over 90 days may be cheaper to write off, once you have confirmed it is not owed.
Common questions
How often should I run the aging report?
Weekly if you have many customers, and at least monthly for everyone.
What does 61 to 90 days past due mean?
It means the invoice is two to three months overdue from its due date, and collection is getting harder.
Should I charge late fees?
Only if your agreement or invoice says so. Check any rules that apply where you operate.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.