Aging Report

What is an accounts receivable aging report?

An accounts receivable aging report is a financial tool used to track outstanding invoices and see how long they’ve been unpaid. The report breaks down unpaid invoices into different time frames so you can see which clients are behind. Knowing the amount owed and how long it’s been overdue helps you keep cash flow steady and stay on top of collections.

Let’s take the scenario where you run a graphic design company. When you look at your aging report at the end of the month, you discover that one of your frequent clients has a $1,000 invoice that hasn’t been paid for forty-five days. It’s time to send a reminder email and hopefully collect on the unpaid amount before it becomes a bigger problem, as the report indicates that this invoice may fall inside the “61-90 days” area.

Key Points

Track overdue payments: Aging reports show which invoices are unpaid and for how long, helping businesses stay on top of collections.
Focus on the oldest debts: These reports highlight the clients with the longest overdue payments, making it easier to prioritize collections.

Aging report example

Here’s what an aging report might look like for a digital marketing services business:

Client Name	Total Amount Due	0-30 Days	31-60 Days	61-90 Days 5	90+ Days
ABC Corp	$5,000	$2,000	$1,500	$1,000	$500
XYZ Industries	$3,000	$3,000	$0	$0	$0
Creative Co.	$1,200	$1,200	$0	$0	$0

According to the report, ABC Corp owes $5,000, of which $500 is past due by more than ninety days. Knowing how much is owed and how long it has been past due makes it possible for you to target your collection efforts by on clients with the oldest due balances.

It becomes more difficult to collect an invoice the longer it remains unpaid. Knowing which clients are falling behind can help you to collect before the situation becomes serious.