Accounts Receivable (AR) Aging
Also known as: AR aging, aging receivables report
Definition
Accounts receivable (AR) aging is a report that groups a company's outstanding invoices by how long they have gone unpaid, typically in bands of 0-30, 31-60, 61-90, and 90+ days past due. It is the standard tool for seeing not just how much a company is owed, but how much of that amount is at growing risk of never being collected.
Why the age of a receivable matters as much as its size
An invoice that is 15 days outstanding is a normal part of doing business. The same dollar amount at 95 days outstanding is a materially different risk - the longer an invoice ages, the less likely it is to be collected in full, whether because of a client's genuine cash flow trouble, a dispute that never got resolved, or simply because it fell off everyone's radar. AR aging turns that risk into a visible pattern instead of a single lump total.
What a healthy aging report looks like
A healthy AR aging report is weighted heavily toward the 0-30 day band, with the 90+ day bucket small and, ideally, shrinking. When the older bands start growing as a share of total receivables, it is usually an early signal of either a collections process problem (invoices going out but nobody following up) or a client-relationship or pricing problem worth investigating client by client before it becomes bad debt.
Why professional services firms watch it especially closely
In law, accounting, and consulting, receivables often start life as unbilled work in progress (WIP) before ever becoming an invoice, so a firm can have a leakage problem on both ends of the same cycle - work that ages too long before being billed, and invoices that age too long before being collected. Tracking WIP aging and AR aging together gives a fuller picture of where cash is getting stuck across the whole lead-to-cash chain, not just after the invoice goes out.
Frequently Asked Questions
What is a typical AR aging schedule?
Most aging reports use 30-day bands: current (0-30 days), 31-60, 61-90, and 90+ days past due. Some firms add finer bands for high-risk accounts, but the 30-day structure is the most common baseline across industries.
How does AR aging relate to bad debt?
AR aging is the leading indicator; bad debt is the lagging outcome. Receivables that sit in the 90+ day bucket for an extended period are the ones most likely to eventually get written off as uncollectible, which is why firms use aging reports to trigger earlier, more active collections follow-up rather than waiting until an invoice is formally deemed uncollectible.
Why do receivables age in the first place, if invoices went out correctly?
Usually because collections follow-up is inconsistent or reactive rather than systematic - invoices go out on time, but nobody has a disciplined cadence for chasing payment once the due date passes. Firms that automate or standardize the follow-up cadence typically see materially less concentration in the older aging bands.
Put this into practice
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