What Is Aging Report?
A list of open receivables or payables grouped by how overdue they are.
Detailed Explanation
Buckets like 0–30, 31–60 days highlight risk. Drives collections and vendor scheduling.
Example
Your AR aging shows $8k over ninety days for one account.
Why It Matters
Prioritizes who to chase or extend credit to.
Key facts
- An aging report (or AR aging report) categorizes outstanding invoices by how long they've been unpaid — typically in 30-day buckets: current, 1-30 days, 31-60 days, 61-90 days, 90+ days.
- AR aging is the single most important AR management report — review monthly minimum, weekly for businesses with significant credit sales.
- Healthy AR aging: 70%+ in current bucket, under 5% in 90+ days. Anything over 10% in 90+ days signals collection problems.
- Collection probability declines sharply with age: 0-30 days = 96%+, 30-60 days = 89%, 60-90 days = 74%, 90+ days = 26% (D&B 2025-2026 benchmarks).
- Aging reports also exist for accounts payable — showing how long YOU've been delaying vendor payments. Used for both cash management and supplier-relationship monitoring.
How it shows up in practice
A 12-person agency's owner reviews the AR aging report on the 1st of every month. April 1, 2026 snapshot: $187,000 total AR — $146K current (78%), $26K 30-60 days (14%), $9K 60-90 days (5%), $6K 90+ days (3%). She immediately identifies the 90+ bucket: two clients owe $4K and $2K respectively. She calls both before 11am, recovering $4K within a week and starting a payment plan on the other. The discipline keeps total AR from drifting upward.
Common mistakes
- Not running the report at all, or running it quarterly instead of monthly — late detection compounds collection problems.
- Reading the report without acting — every bucket should trigger specific action (email at 30, call at 60, escalation at 90).
- Treating each invoice independently — better to view by customer total to spot relationship-level problems.
- Including disputed invoices in aging — they distort numbers and obscure real collection issues.
- Failing to compare aging trends month-over-month — spot deteriorating patterns before they become crises.
Frequently asked questions
How often should I run an aging report?
Monthly minimum for any business with material AR. Weekly for businesses with significant credit sales or a history of collection issues. Quarterly is too slow for actionable management.
What's a healthy AR aging distribution?
Generally: 70%+ in current bucket, 15-20% in 1-30 days past due, 5-10% in 31-60 days, under 3% in 61-90 days, under 2% in 90+ days. Industry-dependent — government contractors and construction firms naturally have older AR.
Should I include credit balances in the aging report?
List them separately, not netted against debit balances. Credit balances are usually customer overpayments or unapplied credit notes — they need investigation and resolution, not aging treatment.
How does aging differ for accrual vs. cash basis?
Aging is more meaningful for accrual-basis businesses since AR exists. Cash-basis businesses don't formally track AR (no revenue until cash received), but most small cash-basis businesses still benefit from informal aging tracking to manage collections.
Can I use aging to estimate bad-debt allowance?
Yes — apply different uncollectibility percentages to each aging bucket based on historical experience (e.g., 1% on current, 5% on 30-60, 25% on 60-90, 75% on 90+). The weighted average becomes your allowance for doubtful accounts.
Related Resources
Last verified: May 2026
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