Aging Accounts Payable

What is Aging of Accounts Payable?

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

How it Works

A business will buy goods and services on a credit basis.

They record the money owed to suppliers in accounts payable.

Suppliers allow a business time to pay.

Each month, payment will move closer to being due.

The business will make more purchases.

This happens over and over. 

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

At this stage, the business will pay what it owes. 

Accounts Payable Aging Report

One way to keep track of accounts payable is with an accounts payable 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 accounts payable move from one time bucket to the next. 

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

Eventually, the accounts payable become current and due. 

© R.J. Hickman 2020