How to read an aged receivables report, column by column
The report shows who owes you and how late. The columns are simple. What to do about each one is the part nobody explains.
An aged receivables report lists what your customers owe, grouped by how overdue it is. If you only look at one report about money you are owed, make it this one.
Where to find it
In Xero it is under Reporting, called Aged Receivables Summary (there is a Detail version too). In QuickBooks Online it is under Reports, called A/R Aging Summary. Menu names move around, so search for "aged" or "aging" if you do not see them.
The columns
Most versions use the same five buckets:
- Current, or not yet due
- 1 to 30 days overdue
- 31 to 60 days
- 61 to 90 days
- Over 90 days
Each customer gets a row, and each bucket shows how much of their balance falls there. The right hand column is the total.
What to do about each one
**Current.** Nothing, mostly. This is money that is behaving. If a large invoice is about to fall due, a short heads-up a few days before often saves a late payment.
**1 to 30 days.** Send a reminder. This is the cheapest bucket to fix, because the customer usually forgot or the invoice got lost. A friendly note works better than a firm one at this stage.
**31 to 60 days.** Someone should speak to them. If a reminder email did not work by now, the problem is probably not forgetfulness. Ask whether there is a dispute, a wrong purchase order number, or a cash problem.
**61 to 90 days.** Treat it as a conversation about a plan. A payment date you both agree on beats a stern email. Write it down.
**Over 90 days.** Decide, do not drift. Either there is an agreed plan, or you stop work for that customer, or you consider writing it off or passing it on. The one thing not to do is leave it in the report for another quarter.
Three habits that make the report useful
1. Look at the total in the 61 days and over columns every month. If it grows, the problem is in your follow up, not your customers. 2. Look for one customer carrying a large share of the overdue amount. One late payer matters more than ten small ones. 3. Compare the report with what you actually chase. If a customer is in the 31 to 60 column and nobody has contacted them, that is the gap.
Disclosure
This article is from Mugavi, which makes accounts receivable software. Mugavi has an aged receivables report with the same five buckets, shows it per customer, and exports it as a CSV. It matches the buckets above, and a customer's statement uses the same rules, so the two never disagree. Everything in this article works with the report your accounting software already has.
Related reading: which overdue QuickBooks invoices to chase first, an accounts receivable month-end checklist for QuickBooks Online, how to forecast cash flow when you have 12 open invoices.