Accounts Receivable Aging Report: How to Read and Use It

2026-11-05

An accounts receivable aging report lists what each customer owes you, sorted by how late it is. Columns such as current, 1 to 30, 31 to 60 and over 60 days show where the risk sits, so you know who to chase first and how much of your money is really at risk.

It is one of the most useful reports a small business can read, because it turns "people owe us money" into a list of names and actions. The profit and loss statement can show a good month while your bank account runs dry. The aging report explains why.

What an accounts receivable aging report shows

Each row is a customer. Each column is an age band, counted from the invoice's due date. The total on the right is what the customer owes, and the bottom row gives the same bands for your whole business.

Most reports use four or five bands, sometimes called buckets:

• Current: not yet due.
• 1 to 30 days: recently late, usually just slow.
• 31 to 60 days: something may be wrong.
• 61 to 90 days and over: at real risk.

Some tools add a 90-plus band, and others stop at 60-plus. Either is fine as long as you read it the same way each time.

"Aging" counts from the due date in most software, though some reports can count from the invoice date. Check which yours uses, because a 30-day invoice can look a month older under the second method.

A worked example

Here is a made-up business with 26,500 outstanding, in whatever currency you bill.

At first sight, 26,500 looks like healthy receivables. Read it properly and three things appear.

Nearly a quarter is seriously late. Customer D's 6,500 is 24.5% of the total. If it never arrives, that is money you have counted as earned but will not bank.

One customer has a new invoice and an old one still open. Customer C has a current invoice and a 5,000 invoice well past due. That usually means a dispute or a lost invoice, not a shortage of money. Ask about that invoice in particular.

The real problem is two names. Customers C and D hold all the money over 30 days late. You do not need a collections project. You need two phone calls.

What each bucket should trigger

The report is only useful if each band has a rule. Here is a simple set you can adapt.

For wording, use our overdue invoice email templates. Decide before a customer reaches each band, so you are acting on a rule rather than a mood.

Three numbers worth tracking

Share over 30 days. Add everything past 30 days and divide by total receivables. In the example, that is 11,500 of 26,500, or 43%. There is no universal right figure, but the trend matters. If it rises three months running, your collections have slipped.

Concentration. What share of your receivables sits with your top one or two customers? If one customer owes half, their delay is your cash problem.

Days sales outstanding. This estimates how long it takes to collect. Divide receivables by credit sales for the period, then multiply by the days in the period. With 26,500 outstanding and 60,000 billed over 90 days, the figure is 26,500 ÷ 60,000 × 90, or about 40 days. If your terms are 30 days, you are collecting ten days late on average.

Errors that make the report lie

An aging report is only as good as the records behind it. Check these before you rely on it.

• Payments not applied. Money received but not matched to an invoice leaves the invoice looking unpaid. You may chase someone who has already paid.
• Credits sitting apart. A credit note not applied to an invoice overstates what is owed.
• Wrong due dates. If an invoice has no due date or the wrong terms, it lands in the wrong band.
• Duplicate customers. "Acme" and "Acme Ltd" split one customer's debt into two smaller, less worrying rows.
• Old balances nobody has looked at. A small balance from two years ago is usually a mistake or a debt to settle with your accountant, not something to keep carrying forward.

Run the report as of the last day of the month for your accountant, and as of today when you are chasing. The two answer different questions.

Writing off an old debt

Sometimes the honest answer is that a debt will never be paid. Keeping it on the report makes your receivables look better than they are. Talk to your accountant about writing it off, because the treatment depends on your accounting method and where you are based.

How this works in Pacten

In Pacten, the receivables aging report lists each customer in Current, 1 to 30, 31 to 60 and 60-plus bands, as of any date you choose. Unapplied payments are not in the bands and do not appear on this report, so match them to invoices before you chase, or the invoice will still look overdue. You can export it as CSV for your accountant, and the finance reports guide lists what else is there. Pacten's report stops at 60-plus, with no separate 90-day band.

Finance's Accounts page shows each customer's invoices and what they owe, and recording money in updates the balance straight away.

Two limits are worth knowing. Pacten has no write-off document: you would raise a credit note or a journal with your accountant's advice. And emailing a statement to a customer is not available yet, so you print or export it. Pacten sits alongside your accounting software if your accountant works elsewhere.