Billings & Collections
Accounts Receivable Aging: Definition, Report Structure, and How to Use It in Financial Planning
Accounts Receivable (AR) Aging shows how long customer invoices have been outstanding. It groups unpaid invoices into time buckets, making it easy to see which customers pay on time and which might need attention.
An AR aging report helps finance teams forecast cash flow more accurately, strengthen collections processes, and spot early signs of credit risk.
See it live in Pluvo
What Is AR Aging?
AR Aging organizes open invoices based on how long they’ve been past due. Most reports use 30-day buckets, such as 0–30, 31–60, 61–90, and 90+ days overdue.
The goal is simple: give you a clear view of expected cash inflows and highlight payment behavior across your customer base.
This metric is a core part of any working capital analysis because it shows where cash is tied up, which customers may be struggling, and how well your invoicing and follow-up processes work.
Why AR Aging Matters
Aging data creates a more realistic picture of upcoming cash flow. It helps you:
Identify overdue accounts before they escalate
Reduce the risk of bad debt
Understand which customers consistently pay late
Inform credit limits, terms, or collection strategies
Improve forecast accuracy and revenue timing
By reviewing aging regularly, finance teams avoid unpleasant surprises and maintain stronger liquidity.
How AR Aging Reports Work
Most aging reports break outstanding invoices into these common buckets:
0–30 days: Within normal terms
31–60 days: Slightly overdue
61–90 days: At-risk territory
90+ days: High probability of nonpayment
A complete report usually includes:
Customer name
Invoice number
Invoice amount
Due date
Days past due
Notes or payment terms
This structure makes it easy to see where to focus collections efforts and which accounts may need follow-up conversations.
Example of an AR Aging View
Here’s a simplified example of what you might see:
Customer | Amount Due | Days Past Due | Aging Bucket |
|---|---|---|---|
Client A | $8,000 | 10 days | 0–30 |
Client B | $12,500 | 45 days | 31–60 |
Client C | $3,200 | 92 days | 90+ |
From this, it’s clear which invoices should be prioritized and which accounts may require changes in terms or a deeper discussion.
How to Interpret AR Aging
You’ll generally want:
Most invoices in the 0–30 day bucket
Few invoices in 31–60
Minimal amounts in 61–90
Little or nothing in 90+
A report weighted heavily toward later buckets often signals issues with invoicing timing, follow-up processes, customer creditworthiness, or broader economic stress.
Benchmarks for AR Aging
There is no single “right” aging distribution, but common targets include:
Low percentages in overdue buckets
Consistent invoice processing cycles
Stable customer payment behavior over time
A healthy aging pattern contributes to cleaner forecasting and fewer last-minute cash adjustments.
Common Mistakes When Using AR Aging
Treating the report as static rather than reviewing trends
Waiting too long to follow up on overdue accounts
Ignoring customer-specific payment patterns
Using the same credit terms for all customers
Allowing aging buckets to grow without documented actions
Forgetting to reconcile aging reports during month-end close
Avoiding these mistakes keeps your aging report reliable and actionable.
Related Metrics to Track With AR Aging
Pair aging analysis with metrics that add deeper context:
Days Sales Outstanding (DSO)
AR Turnover
Average Collection Period
Average Days Delinquent
Collections Effectiveness Index
Invoice Status
Together, these give a complete view of collection health and cash conversion timing.
How to Analyze AR Aging in Pluvo
Step 1: Import or map your outstanding invoices into Pluvo.
Step 2: Pluvo organizes them into aging buckets automatically.
Step 3: Use scenarios to see how changes in terms or follow-up processes affect cash timing.
Step 4: Connect aging results to your cash flow model to understand how delayed payments affect hiring, expenses, and runway.
This makes aging a dynamic planning tool rather than a static report.
Try This Metric in Pluvo
See how AR Aging influences cash flow and scenario planning.
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FAQs
What does a “good” AR Aging report look like?
Most invoices fall within the 0–30 day bucket, with minimal amounts aging past 60 days.
How often should companies review AR Aging?
Monthly for most teams, weekly for companies with high invoice volume or tight cash cycles.
What causes invoices to move into later buckets?
Slow customer payments, unclear invoice terms, billing errors, or weak follow-up processes.
How does AR Aging relate to DSO?
Aging shows the distribution of overdue amounts. DSO summarizes the overall time it takes to collect payments.