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See how an aging of accounts receivable sample works and find out what is the best tool for tracking accounts receivable aging for your business.
Chasing down unpaid invoices can feel like a full-time job, pulling you away from actually running your business. You know money is owed, but figuring out who is late and by how much is a chaotic scramble. An accounts receivable aging report cuts through that noise. It’s a powerful tool that organizes all your outstanding invoices into clear, time-based categories. By looking at an aging of accounts receivable sample, you can instantly see who needs a gentle reminder and who needs urgent attention. But to truly transform your collections, the essential question becomes: what is the best tool for tracking accounts receivable aging?
Think of an accounts receivable (AR) aging report as a clear, organized summary of all the money your customers owe you. It’s not just a list of unpaid invoices; it’s a strategic tool that categorizes these outstanding payments based on how long they’ve been due. By sorting invoices into time-based buckets, you get an immediate picture of your company’s financial health and the effectiveness of your collections process. This report is fundamental for any business that extends credit to its customers, as it directly impacts your cash flow and financial planning. It helps you answer critical questions: Who are your late-paying customers? How much cash can you expect to collect soon? And which accounts need immediate attention before they become a serious problem?
At its core, an accounts receivable aging report is a document that lists all of your customers' unpaid invoices and sorts them by their due dates. The "aging" part refers to how it groups these outstanding amounts into categories, typically 0-30 days, 31-60 days, 61-90 days, and over 90 days. This simple organization is incredibly powerful. It gives you a quick, at-a-glance understanding of your receivables' health. It matters because it helps you manage your cash flow effectively by highlighting which payments are overdue. It also allows you to assess the credit risk associated with your customers, helping you make smarter decisions about who to extend credit to in the future.
A standard AR aging report contains several key pieces of information that make it so useful. You’ll find a list of all your customers with outstanding balances, along with the specific details for each unpaid bill, like the invoice number, date, and original amount. The report clearly shows the due date for each invoice and, most importantly, categorizes the total amount owed by each customer into the aging buckets. For example, you might see that Customer A owes $500 in the "current" (0-30 days) column, while Customer B has $1,200 sitting in the "over 90 days" column. These core components work together to give you a detailed and actionable overview of your receivables.
Regularly reviewing your AR aging report has a direct and positive impact on your business. It allows you to identify and address payment issues before they snowball into significant cash flow shortages. When you can see exactly who is paying late and how late they are, you can adjust your collection strategies accordingly. Maybe one customer just needs a friendly reminder, while another requires a more formal follow-up. This report provides the data you need to make those calls. By analyzing these trends, you can also spot potential risks to your cash flow and take proactive steps to protect your company’s financial stability, ensuring you have the capital needed to operate and grow.
An accounts receivable aging report works by sorting your unpaid invoices into different time-based buckets. Think of it as organizing your receivables by age, from newest to oldest. This simple act of categorization is incredibly powerful. Instead of looking at a long, overwhelming list of outstanding payments, you get a clear, at-a-glance summary of who owes you money and for how long. This structure makes it easy to spot potential problems, prioritize your collection efforts, and understand the overall health of your cash flow. Each category tells a different story and calls for a different course of action.
This is the ideal category, where the majority of your accounts receivable should live. It includes all invoices that are not yet due or are less than 30 days past their due date. Think of this bucket as a sign of a healthy business with a strong customer base that pays on time. When this column holds the highest dollar value on your report, it indicates that your cash flow is in good shape and your credit policies are working effectively. While these accounts aren't a concern yet, monitoring them ensures you can catch any potential delays before they become a problem.
Once an invoice crosses the 30-day threshold, it moves into the "getting late" zone. This category is your yellow light—it’s time to pay close attention. These accounts aren't a crisis yet, but they do require action. This is where your standard collection process, like sending reminder emails or making follow-up calls, should kick in. The 31-90 day buckets are critical for identifying customers who are starting to fall behind. Addressing these overdue payments promptly can prevent them from becoming a more significant issue and helps you maintain control over your company’s working capital.
When an invoice is more than 90 days past due, it enters the high-risk category. This is a red flag. The longer an invoice goes unpaid, the lower the chances you'll ever collect on it. These accounts pose a direct threat to your financial stability and can cause serious cash flow shortages if they start to pile up. Your collection strategy for these invoices needs to be more firm. This may include sending a final demand letter or considering the use of a third-party collection agency. The goal here is to recover as much of the owed amount as possible and minimize your losses.
At some point, you have to recognize that a high-risk invoice may never get paid. This is when it becomes "bad debt." Your AR aging report is the key tool for identifying these uncollectible accounts. After you’ve exhausted all reasonable collection efforts, the next step is to write off the debt. This is an accounting process where you remove the receivable from your books, which gives you a more accurate view of your company's financial position. This process also provides valuable insights that can help you refine your credit policies and make smarter decisions about which customers to extend credit to in the future. Having clear data visibility into these patterns is essential for long-term financial health.
An accounts receivable aging report might sound complicated, but it’s really just a clear, organized way to see who owes you money and for how long. Think of it as a snapshot of your company's financial health, showing you which customers are paying on time and which ones are falling behind. By breaking down this report, you can get a much better handle on your cash flow and make smarter decisions about your credit and collections policies. Let's walk through what a standard AR aging report looks like, piece by piece.
At its core, an AR aging report is a list of all the money your customers owe you for unpaid bills. It shows exactly how long each invoice has been outstanding. To be useful, every report needs a few key pieces of information for each unpaid invoice: the customer's name, the invoice number, the invoice date, and the total amount due. This basic data is the foundation of the report and allows you to track specific transactions from start to finish, ensuring nothing gets lost in the shuffle.
The real magic of an AR aging report is how it organizes the data. The report groups unpaid invoices into categories based on how old they are. You’ll typically see columns like "Current" (0-30 days), "31-60 days," "61-90 days," and "91+ days." To create this, you’ll need to gather all unpaid invoices from your accounting system and sort them into these aging buckets based on their due dates. This structure immediately highlights which accounts need your attention, allowing you to prioritize your collection efforts on the oldest, most at-risk invoices first.
This report isn't just a list; it's a tool for analysis. A healthy AR aging report shows that most of your receivables—ideally around 80-90%—are in the "Current" or "1-30 days" overdue categories. As invoices move into the older buckets, the likelihood of collecting payment drops. This report is crucial for calculating your allowance for doubtful accounts, which is an estimate of the revenue you might lose from bills that never get paid. Keeping a close eye on these metrics helps you understand your cash flow and assess financial risk with more accuracy. You can find more insights in the HubiFi Blog.
Your AR aging report also helps you calculate a super useful metric: the average collection period. This number tells you, on average, how many days it takes for your customers to pay you after you've made a sale on credit. You can figure out the average number of days it takes customers to pay using this formula: (average accounts receivable × 360 days) / credit sales. Your "average accounts receivable" is the average amount owed to you over a period, and "credit sales" is the total sales made on credit during that same time. Knowing this number helps you spot trends and see if your collection efforts are speeding up or slowing down, which is critical for managing your cash flow effectively.
Let's be realistic—not every invoice will be paid. That's where the "allowance for bad debt" comes in. It's an estimate of the money you expect to lose from uncollectible accounts. Your aging report is the perfect tool for this because, as a general rule, the older an invoice is, the less likely you are to collect it. For instance, you might apply a percentage to each aging bucket: 1% for current invoices, 5% for those 31-60 days past due, and maybe 15% for anything over 90 days. By adding up these amounts, you get a realistic estimate of potential losses, which keeps your financial statements accurate and your planning grounded in reality.
While a spreadsheet of numbers is useful, visual aids can make the information much easier to digest. Many modern accounting platforms can turn your AR aging data into charts and graphs, helping you spot trends at a glance. For example, a pie chart can show the percentage of your total receivables in each aging category. Reports can also be presented in both summary and detail formats. A summary gives you a high-level overview, while a detailed report lets you drill down into specific customer accounts. Using a system with strong integrations with HubiFi can pull this data automatically, saving you time and effort.
So, what does a "good" AR aging report actually look like? While the specifics can vary by industry, a healthy report generally shows that the vast majority of your receivables—ideally around 80-90%—are in the "Current" or "0-30 days" categories. This indicates that your customers are paying on time and your cash flow is strong. As invoices creep into the older buckets, the probability of collecting that money begins to drop significantly. Regularly reviewing your AR aging report isn't just a bookkeeping chore; it's a vital health check for your business. It allows you to manage your cash flow proactively and address payment issues before they spiral into major problems that could hinder your company's growth.
Reconciling your AR aging report is about more than just making sure the numbers add up; it’s about turning that data into a concrete action plan. The first step is to ensure the total outstanding balance on your AR aging report matches the accounts receivable balance in your general ledger. If they don't align, it’s time to investigate common culprits like misposted payments or unapplied credit memos. Once your numbers are accurate, you can use the report to guide your collection strategy. It provides the data you need to decide who gets a gentle reminder and who needs a more direct follow-up. This process helps you protect your financial stability by spotting negative payment trends early and taking action to keep your cash flow healthy.
Creating your first AR aging report might seem like a chore, but it’s a straightforward process that gives you incredible insight into your business’s financial health. Think of it as building a financial dashboard for your receivables. Once you get the hang of it, you’ll be able to spot potential cash flow issues before they become major problems. Breaking it down into a few simple steps makes it manageable, whether you’re using a basic spreadsheet or a sophisticated accounting system. Let's walk through exactly how to build one from scratch.
First things first, you need to pull together all your outstanding invoices. This means you need to gather all unpaid bills from your accounting system. This initial step is crucial because it sets the foundation for your entire report. You’ll want to collect key details for each invoice: the customer’s name, the invoice number, the original due date, and the total amount due. Having a single source of truth for this information is a lifesaver. If your data is scattered across different platforms, consolidating it is your top priority. The right system integrations can automate this process, ensuring nothing slips through the cracks.
Once you have your list of unpaid invoices, it’s time to sort them into aging categories. You’ll group these bills into buckets—like 0-30 days, 31-60 days, and so on—based on their due date. This is the "aging" part of the report, and it’s where the real insights come from. This simple act of categorization helps you immediately see which accounts are current versus which ones are becoming a problem. It allows you to prioritize your collection efforts, focusing on the oldest, most at-risk accounts first. This process is fundamental to maintaining healthy cash flow management and keeping your business on solid financial footing.
Now you can build the report itself. Start by listing all your customers who have outstanding balances. Next to each customer, place their unpaid invoice amounts into the correct time-based columns you just created. Finally, add up the totals for each aging category and for each customer to get a clear, comprehensive picture of your accounts receivable. While you can do this manually in a spreadsheet, most modern accounting software can generate this report for you. The goal is to create a document that’s easy to read at a glance, helping you and your team make quick, informed decisions. For more tips on financial reporting, check out the HubiFi blog.
Before you start making decisions based on your new report, take a moment to verify the data. An AR aging report is only useful if it’s accurate. Simple mistakes can throw everything off. Common invoicing errors include incorrect amounts, missing payment terms, or sending invoices to the wrong contact. A quick review can catch things like a payment that was applied to the wrong invoice or a simple data entry typo. Taking the time to double-check your work ensures you have a reliable tool for managing your receivables. If manual errors are a recurring issue, it might be time to schedule a demo to see how automation can bring precision to your financial processes.
Your AR aging report is more than just a spreadsheet of numbers; it’s a roadmap for maintaining healthy cash flow. But a map is only useful if you follow it. Putting that data into action requires a solid set of practices that turn insights into results. By creating clear, repeatable processes for managing your receivables, you can collect payments faster, reduce the risk of bad debt, and build stronger relationships with your customers. Here are the foundational practices every business should implement.
Think of your AR aging report as a living document. It needs consistent attention to be effective. Set aside time each week to review it, looking for invoices that have just become overdue and identifying any patterns with specific customers. By consistently monitoring your aging report, you can spot potential problems before they escalate. This regular check-in allows you to be proactive rather than reactive, helping you improve cash flow, reduce bad debts, and maintain positive customer relationships. It’s a simple habit that pays significant dividends by keeping your finger on the pulse of your company’s financial health and ensuring nothing slips through the cracks.
The ideal frequency for running an AR aging report really depends on your business. If you handle a high volume of transactions or operate with tight cash flow, checking in daily or weekly is a smart move. For many other businesses, a consistent weekly review is the perfect rhythm. The key isn't a magic number but the habit of consistency. When you regularly review your report, you can address payment issues before they snowball into significant cash flow shortages. This transforms the report from a simple accounting task into a proactive tool for managing the financial health of your business.
One of the most common missteps in accounts receivable is not having a formal credit policy. This document is your rulebook for extending credit to customers, and it’s crucial for preventing cash flow issues down the line. Your policy should clearly outline your payment terms (like Net 30 or Net 60), set credit limits for different customers, and detail the steps for approving new accounts. Make sure you communicate these terms to every customer before making a sale. A well-defined credit policy removes ambiguity, sets clear expectations from the start, and gives your team a consistent framework to follow when managing customer accounts and collections.
A solid credit policy isn't just about setting rules; it's about applying them wisely. When deciding whether to extend credit to a new customer, you need a consistent way to evaluate their risk. A great framework for this is the 5 C's of credit. This model helps you look at a customer's financial situation from multiple angles. It covers their Character (their track record for paying bills on time), Capacity (their ability to generate enough cash to pay you), Capital (the money they have invested in their own business), Conditions (the economic environment they operate in), and Collateral (any assets that could secure the credit). Using this structured approach helps you make smarter, more objective decisions, reducing the chances you'll be stuck chasing down unpaid invoices later on.
Your AR aging report tells you exactly which accounts need attention. The next step is having a plan for what to do with that information. An effective collection strategy is a tiered approach based on how overdue an invoice is. For example, an invoice in the 31-60 day bucket might trigger a friendly follow-up call, while one over 90 days may require a more formal dunning letter. The key is to document these steps so your team acts consistently. By adjusting your strategies based on the data in your aging report, you can manage receivables more effectively and maintain a healthy cash flow without scrambling every time an invoice becomes seriously past due.
Not all overdue invoices carry the same weight. Your AR aging report is the tool that helps you figure out where to focus your energy first. It works by organizing your receivables into clear, time-based buckets, transforming a long, overwhelming list into a strategic action plan. Instead of randomly picking who to call, you can immediately see which accounts pose the biggest risk to your cash flow. The oldest debts, typically those in the 90+ day category, should almost always be your top priority, as the chances of collecting them decrease with each passing day. This data-driven approach ensures your collection efforts are spent where they’ll have the most impact.
Once you know which accounts to prioritize, you need a consistent plan of action. This is where standardized collection procedures come in. Creating a tiered approach based on how overdue an invoice is removes the guesswork and ensures every customer is treated fairly and consistently. For example, an invoice that’s 30 days late might get an automated email reminder, while one at 60 days prompts a personal phone call. By documenting these steps, you create a repeatable process that your team can follow without hesitation. This not only improves your efficiency but also helps you maintain professional relationships with your clients, even when discussing overdue payments.
How you communicate is just as important as when you communicate. Clear, professional, and consistent messaging can prevent many payment delays. Start by ensuring every invoice is accurate—double-check amounts, due dates, and contact information before sending. Establish clear internal guidelines for all collection-related communication to maintain a respectful and helpful tone, even when an account is overdue. Simple errors or a confusing process can cause delays, so making it easy for customers to pay and ask questions is key. Strong communication guidelines not only help you get paid faster but also protect the valuable customer relationships you’ve worked hard to build.
Your AR aging report isn't just a one-time snapshot; it's a tool for spotting trends over several months. Are certain customers always landing in the 31-60 day bucket? Does a specific industry segment consistently pay on time? Recognizing these patterns is incredibly valuable. It helps you predict future cash flow with greater accuracy and spot customers who frequently pay late. With this insight, you can make strategic adjustments, like tightening credit terms for repeat offenders or offering early payment discounts to reliable clients. Having clear data visibility into these payment behaviors is essential for protecting your long-term financial health and making proactive decisions.
Manually tracking invoices in spreadsheets is a recipe for headaches and missed payments. It’s time-consuming, prone to human error, and simply can’t keep up with a growing business. The good news is that technology can transform your accounts receivable process from a reactive chore into a proactive strategy. By using the right tools, you can automate tedious tasks, gain clearer financial insights, and get paid faster. This isn't about adding another complicated system to your plate; it's about implementing smart solutions that work for you, giving you back valuable time to focus on what really matters—running your business.
The first step is to find accounting software that fits your company's needs. Tools like QuickBooks are great for creating AR aging reports and sending invoices, but as your transaction volume grows, you may need a more robust solution. The right platform does more than just generate a report; it becomes the central hub for your receivables management. Look for software that is intuitive, can scale with your business, and offers the features you need most, like customizable reporting and client communication logs. A powerful system will give you a clear, accurate view of your cash flow, helping you make smarter financial decisions.
It's important to understand the difference between AR reporting and AR automation. While they sound similar, they serve two distinct functions. AR reporting software is all about visibility; it gathers your data and presents it in a clear format, like an aging report, so you can see what's happening. Think of it as the diagnostic tool. On the other hand, AR automation software is about action. It takes on the repetitive tasks in the collections process, like sending payment reminders, tracking communications, and applying payments. Most modern solutions actually combine both reporting and automation, giving you the insights and the tools to act on them in one place.
When you're evaluating different AR software, there are a few non-negotiable features to look for. First, you need strong reporting and analytics that give you a real-time view of your cash flow and customer payment history. The system should also offer collections management tools to automate follow-ups and track communications. Another critical feature is a self-service customer portal, which allows your clients to view invoices and make payments on their own, reducing your administrative workload. Most importantly, look for a solution with robust integrations. Your AR software needs to connect seamlessly with your accounting system, ERP, and CRM to ensure data is accurate and up-to-date across the board, creating a single source of truth for your financials.
The market for AR software is broad, with different tools catering to different business needs. Solutions like Gaviti focus on using AI to automate the collections process, while platforms like HighRadius are built for larger, enterprise-level companies needing deep performance insights. Other names you might come across include Blackline, which offers a comprehensive suite of finance and accounting tools, and Versapay, which emphasizes collaborative AR to help teams work together to accelerate payments. Each has its own strengths, so the best choice depends on your company's size, transaction volume, and specific challenges. The key is finding a platform that not only generates reports but actively helps you improve your collection cycle.
Automation is your best friend when it comes to managing accounts receivable. Instead of manually tracking payment due dates and drafting follow-up emails, you can set up automated workflows to handle it all for you. Imagine a system that automatically sends polite payment reminders to clients at set intervals—say, 7, 15, and 30 days past due. This not only ensures consistent communication but also frees up your team to focus on high-priority accounts and strategic planning. Automated revenue recognition takes this a step further by streamlining how you account for payments, ensuring accuracy and compliance without the manual effort.
Let's take the concept of automation a step further with alerts and reminders. Instead of just generating a report, the right system can actively help you manage it. You can set up your software to automatically flag invoices as they approach their due date or become overdue, giving your team a heads-up to act quickly. This is a huge step up from manual tracking. These systems can also send out customized, polite payment reminders at predefined intervals, ensuring consistent communication without any extra effort from your team. This frees them from chasing down routine late payments and allows them to focus on more complex accounts. By using technology to handle these repetitive tasks, you not only save time and reduce errors but also gain the real-time insights needed for smarter financial decisions.
An AR aging report is a powerful tool, but its value diminishes if the data is outdated. Modern financial platforms offer real-time analytics, giving you an up-to-the-minute picture of your receivables. This allows you to spot negative trends as they emerge, not weeks later. You can quickly identify which clients are consistently late payers or if your average collection period is increasing. These real-time insights empower you to address potential cash flow problems before they escalate, turning your AR report from a historical document into a forward-looking strategic asset.
AI and machine learning take real-time data to the next level. Instead of just seeing what's late, these tools can analyze past payment patterns to predict which invoices are likely to become overdue. This lets you shift from a reactive to a predictive collections strategy. You can identify high-risk accounts before they become a problem and focus your team's energy where it matters most. This kind of automated financial reporting improves collection rates and strengthens your cash flow. If you're curious how predictive analytics can fit into your business, you can schedule a demo to see it in action.
Your accounting software shouldn't be an island. For maximum efficiency, it needs to connect seamlessly with the other tools you use to run your business, like your CRM and ERP systems. When your systems are integrated, data flows automatically between them, creating a single source of truth. For example, your sales team can see a customer's payment history directly in the CRM before extending additional credit. This level of connectivity eliminates redundant data entry, reduces errors, and ensures everyone in your organization is working with the same accurate information. You can explore a variety of seamless integrations to build a connected financial ecosystem.
Think about all the places your financial data lives: your CRM holds customer details, your payment processor tracks transactions, and your ERP manages inventory. When these systems don't talk to each other, your team is left manually piecing together a puzzle, which is a recipe for errors and wasted time. Connecting these disparate data sources is about creating a single, reliable source of truth. When data flows automatically between your tools, you eliminate redundant data entry and ensure everyone is working from the same accurate information. This unified approach is what allows you to get a clear view of your financial health in real time, turning fragmented information into actionable insights for smarter, faster decision-making.
An accounts receivable aging report is more than just a list of who owes you money. It’s a powerful diagnostic tool for your company’s financial health. When you know how to read it correctly, you can spot potential issues before they become major problems, refine your collections strategy, and make smarter decisions about your cash flow. Analyzing this report regularly helps you move from simply tracking debt to proactively managing your financial future. It’s about understanding the story the numbers are telling you and using those insights to keep your business running smoothly.
Think of your AR aging report as an early warning system for your cash flow. It clearly shows you which customers are paying late, how much they owe, and exactly how long that payment has been outstanding. This visibility is crucial for managing your company’s money and helps you decide if you need to adjust your payment rules. If you notice a large portion of your receivables is tied up with one or two late-paying clients, that’s a significant risk. By regularly reviewing the report, you can identify these patterns and take steps to protect your business, like tightening credit terms or pausing services for high-risk accounts.
Your AR report is also a scorecard for your collections process. A healthy report shows that most of your outstanding invoices—ideally 80% to 90%—are in the "current" or "1-30 days" overdue categories. If you see a growing percentage of receivables creeping into the 60- or 90-day columns, it’s a clear sign that your collection efforts may need a tune-up. You can use this data to track key metrics like Days Sales Outstanding (DSO) over time. Seeing these numbers improve month after month is a great way to confirm your strategies are working and your team is effectively managing receivables, especially when your systems have seamless integrations.
The best financial strategies are built on solid data, not guesswork. By consistently monitoring your aging report and reviewing open invoices, you can use the information to adjust your policies and processes for better results. For example, if you notice that clients in a certain industry consistently pay late, you might change their payment terms. Or, you could introduce an early payment discount to encourage faster payments. These data-driven insights allow you to strengthen customer relationships while reducing bad debt and improving your overall cash flow.
The real value of the AR aging report comes from using it to take decisive action. The report helps you see potential risks to your cash flow early, so you can take steps to keep your finances healthy. For instance, you can create a priority list for your collections team, focusing their efforts on the largest and oldest outstanding balances first. It also gives you the clear evidence you need to decide when it’s time to stop providing services to customers who haven’t paid their old bills. This proactive approach helps you maintain control and ensures you’re not just waiting for payments to come in.
An AR aging report is more than just a snapshot of your receivables; it’s a roadmap for improvement. Once you have the data, the next step is to use it to make your entire accounts receivable process smarter, faster, and more effective. Optimizing your AR process isn't about a single, massive overhaul. It's about making consistent, data-informed adjustments that strengthen your cash flow and reduce financial risk over time. By focusing on a few key areas, you can turn insights from your aging report into a more resilient financial operation.
Your aging report is your best tool for spotting bottlenecks. Are certain invoices consistently slipping past the 30-day mark? By consistently monitoring your aging report and reviewing open invoices, you can pinpoint these inefficiencies. Use the data to adjust your processes, which can directly improve your cash flow and strengthen customer relationships. For example, automating invoice reminders can save hours of manual work and get you paid faster. Having a clear view of your data integrations is the first step to building a more efficient system that works for you, not against you.
Not all customers are the same, and your payment terms shouldn't be either. Your AR aging report shows you which clients pay on time and which ones consistently lag. Use this information to manage your receivables more effectively. For customers with a great payment history, you might offer more flexible terms. For those who are frequently late, consider shortening payment windows or requiring a deposit upfront. Adjusting your credit policies based on real data helps you maintain a healthy cash flow and reduces the risk of taking on problematic accounts. It’s a proactive way to protect your company’s finances.
Many businesses operate without a formal credit policy, which creates unnecessary risk. Establishing internal controls means creating a clear, consistent process for everyone to follow. This includes defining who can approve credit, setting standard payment terms, and outlining the exact steps for collections at 30, 60, and 90 days. A documented policy removes guesswork and ensures every customer is treated fairly. It also helps mitigate risks associated with accounts receivable by creating a predictable framework for managing credit. You can find more tips for strengthening your financial operations on our blog.
Optimizing your AR process is an ongoing effort, not a one-time project. Set aside time each month or quarter to review your aging report with your team. Ask critical questions: What’s working? What isn’t? Are our collection emails effective? Use these discussions to test small changes, like tweaking the wording in your reminder emails or adjusting your follow-up schedule. By treating process improvement as a continuous cycle, you ensure your AR management evolves with your business. If you're ready to see how technology can support this cycle, you can schedule a demo to explore automated solutions.
How often should I be looking at my AR aging report? Think of this report as a vital sign for your business’s financial health. You wouldn't just check your pulse once a year. I recommend reviewing your AR aging report at least once a week. This regular check-in allows you to be proactive, catching overdue invoices the moment they slip into a new category rather than discovering a major cash flow problem weeks later. A quick weekly review keeps you in control and helps you address issues before they escalate.
What's the first thing I should look for when I open the report? Your eyes should immediately go to the oldest aging columns—typically the "61-90 days" and "over 90 days" buckets. These totals represent your highest-risk receivables and the most immediate threat to your cash flow. While it's great to see a healthy "current" column, the oldest debts require the most urgent action. Focusing here first helps you prioritize your collection efforts where they will have the biggest impact.
My report shows a lot of invoices over 90 days. What's my next step? Seeing a high balance in the 90+ day column is a clear signal to act decisively. At this stage, your standard friendly reminders have likely been ineffective. It's time to implement a more formal collection strategy, which could include a final demand letter or involving a third-party collections agency. It's also the point where you need to have a frank internal discussion about whether this debt is becoming uncollectible and may need to be written off.
Is it okay to have different payment terms for different customers? Absolutely. In fact, it’s a smart business practice. Your AR aging report provides the data you need to make these decisions confidently. A customer who consistently pays on time has earned your trust and could be offered more flexible terms. Conversely, a client who frequently appears in your 60- or 90-day columns may need shorter payment windows or be required to pay a deposit upfront on future work.
Can I just use a spreadsheet, or do I really need accounting software? When you're just starting out, a spreadsheet can certainly get the job done. However, as your business grows and your transaction volume increases, manual tracking becomes incredibly time-consuming and prone to costly errors. Modern accounting software automates the entire process, providing you with an accurate, real-time report in seconds. This frees you from tedious data entry and gives you a much clearer, more reliable picture of your financial standing.
Former Root, EVP of Finance/Data at multiple FinTech startups
Jason Kyle Berwanger: An accomplished two-time entrepreneur, polyglot in finance, data & tech with 15 years of expertise. Builder, practitioner, leader—pioneering multiple ERP implementations and data solutions. Catalyst behind a 6% gross margin improvement with a sub-90-day IPO at Root insurance, powered by his vision & platform. Having held virtually every role from accountant to finance systems to finance exec, he brings a rare and noteworthy perspective in rethinking the finance tooling landscape.
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