Accounts Receivable Aging
A report that categorizes outstanding accounts receivable by the length of time each invoice has been unpaid, used to identify collection issues.
What is AR Aging?
Accounts receivable aging (also called an AR aging report or aging schedule) is a financial management tool that categorizes a company's outstanding receivables into time buckets based on how long each invoice has been unpaid — typically 0–30 days, 31–60 days, 61–90 days, and over 90 days. The older an invoice, the less likely it is to be collected. Aging reports help management identify slow-paying customers, prioritize collection efforts, and estimate the allowance for doubtful accounts. Under the aging-of-receivables method, companies apply progressively higher uncollectibility rates to older buckets (e.g., 1% to current, 10% to 31–60 days, 25% to over 90 days) to calculate a reasonable bad debt reserve.
Example
A B2B distributor's month-end AR aging report shows: $500,000 in current invoices (0–30 days), $120,000 aged 31–60 days, $45,000 aged 61–90 days, and $30,000 over 90 days. Applying uncollectibility rates of 1%, 5%, 15%, and 40% respectively, the company estimates $5,000 + $6,000 + $6,750 + $12,000 = $29,750 in likely uncollectible amounts and sets its allowance for doubtful accounts accordingly. The $30,000 over-90-day balance triggers an immediate call to the credit manager to assess whether a write-off is warranted.