Aging Accounts Receivable

What is Aging of Accounts Receivable?

The aging of accounts receivable report lists all the money owed to the business by customers, ranked by age of debt.

How it Works

A business will make sales to customers on a credit basis.

They record the money owed by customers in accounts receivable.

This means the business is allowing their customers time to pay.

Each month, the payment will move closer to being due.

At the same time, the business will make more sales 

This happens over and over.

Eventually, the original accounts receivable will become current and due.

At this stage, most customers will pay what they owe. 

Accounts Receivable Aging Report

One way to keep track of accounts receivable is with an accounts receivable aging report.

This report shows receivables due, set out in columns.

These columns are called time buckets, each of which extends 30 days.

As time moves on, the receivables move from one time bucket to the next.

All the while, the business will add more and more accounts receivable.

Eventually, the accounts receivable become current and due.

© R.J. Hickman 2020