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.
![aar 1](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-1.jpg)
How it Works
A business will make sales to customers on a credit basis.
![aar 2](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-2.jpg)
They record the money owed by customers in accounts receivable.
![aar 3](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-3.jpg)
This means the business is allowing their customers time to pay.
![aar 4](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-4.jpg)
Each month, the payment will move closer to being due.
![aar 5](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-5.jpg)
At the same time, the business will make more sales
![aar 6](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-6.jpg)
This happens over and over.
![aar 7](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-7.jpg)
Eventually, the original accounts receivable will become current and due.
![aar 8](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-8.jpg)
At this stage, most customers will pay what they owe.
![aar 9](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-9.jpg)
Accounts Receivable Aging Report
One way to keep track of accounts receivable is with an accounts receivable aging report.
![aar 10](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-10.jpg)
This report shows receivables due, set out in columns.
![aar 11](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-11.jpg)
These columns are called time buckets, each of which extends 30 days.
![aar 12](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-12.jpg)
As time moves on, the receivables move from one time bucket to the next.
![aar 13](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-13.jpg)
All the while, the business will add more and more accounts receivable.
![aar 14](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-14.jpg)
Eventually, the accounts receivable become current and due.
![aar 15](https://seeaccountingnow.online/wp-content/uploads/2021/08/aar-15.jpg)
© R.J. Hickman 2020