Accounts Receivable Aging: What It Tells You and What to Do Next

An accounts receivable aging report lists every unpaid customer invoice and sorts it by how long it's been outstanding, usually in buckets of current, 1–30, 31–60, 61–90 and over 90 days past due. It tells you who owes you money, how late they are, and where your cash is stuck.

Reading it takes five minutes. Acting on it is where the money is. Here's how to do both.

The report nobody opens until it's too late

Priya runs a commercial cleaning company in Austin. Her sales grew 30% this year, but every other Friday she's moving money from savings to cover payroll. When her bookkeeper finally pulled the AR aging report on Oct 1, 2026, the answer was right there: $20,100 owed, and almost a quarter of it more than 60 days late.

That's the thing about receivables. Every dollar in that report is revenue you've already earned and already counted in profit. It just hasn't become cash yet. Some of it never will unless somebody asks for it.

What an AR aging report looks like

Here's a simplified version of Priya's report as of Oct 1, 2026. The customer names are made up for this example.

"Current" means not yet due. The other columns count days past the due date, not days since the invoice was sent. Some reports age from the invoice date instead, so check which one yours uses before you compare numbers.

How to read it in five minutes

Look at the bottom row first

The percentages tell you the health of the whole book. In a healthy small business, most of your receivables sit in current and 1–30. Priya has 62.2% there. The other 37.8% is past 30 days, and 23.4% ($4,700) is past 60. That's the part to worry about.

Then scan the right-hand columns

The further right a balance sits, the less likely you are to collect it. That's not a law, just a pattern most bookkeepers see over and over. An invoice 15 days late usually means someone forgot. An invoice 100 days late usually means something's wrong: a dispute, a cash problem on their end, or an invoice that went to the wrong person.

Look for customers spread across buckets

Harbor Property Group has money in both 1–30 and 31–60. That often means they're paying, just slowly and one invoice at a time. Sunny Day Preschool has a current invoice and a 61–90 invoice. That pattern usually means one invoice is disputed or was missed while newer ones get paid.

Watch the concentration

Harbor Property Group alone is 30% of what Priya is owed. If one customer makes up a big share of your AR, their payment habits are your cash flow.

Calculating days sales outstanding (DSO)

DSO is a single number for how long, on average, it takes you to collect. The simple version:

DSO = (accounts receivable ÷ credit sales for the period) × days in the period

Priya's credit sales over the last 90 days were $54,000. So:

$20,100 ÷ $54,000 × 90 = 33.5 days

Her standard terms are Net 15. Customers are taking more than twice as long as she asked. Tracking DSO monthly shows whether your collection efforts are working, even when sales move around.

What to do with each bucket

Here's a practical playbook. Adjust the tone to your industry, but keep the timing.

Applied to Priya's report:

• Brightline Dental: nothing to do. Good customer.
• Oak & Iron Fitness: a reminder email on the $2,400 today.
• Harbor Property Group: a call to their accounts payable contact about the $2,900, plus a reminder on the $3,150.
• Sunny Day Preschool: call the director. A $1,100 invoice at 61–90 next to a current one smells like a dispute or a lost invoice.
• Delmar Auto Body: this one needs a decision. Priya stops scheduling new cleans until it's settled and sends a final notice with a firm date.

When an invoice won't be paid

Sometimes you have to accept it. If a customer has closed, can't be reached, or a dispute is settled for less, the unpaid amount gets written off as a bad debt. Under accrual accounting you either record bad debt expense directly or, if you keep an allowance for doubtful accounts, write it off against the allowance. The right approach depends on your size and how you report, so it's a good conversation to have with your CPA or bookkeeper.

What you shouldn't do is leave a dead invoice sitting in the 90+ column for a year. It overstates your assets and makes the report less useful every month it stays there.

Habits that keep the right-hand columns empty

• Invoice the day the work is done
• Put the due date and how to pay on every invoice, clearly
• Get the right billing contact up front, especially with larger companies
• Send reminders on a schedule, not when you remember
• Ask for deposits on big or new jobs
• Review the aging report every week if AR is more than a month of sales

A weekly AR review checklist

• [ ] Reconcile your bank feed so recent payments are applied to invoices
• [ ] Run the AR aging report as of today
• [ ] Note the total past 30 days and past 60 days
• [ ] Send reminders on everything 1–30 days
• [ ] Call on everything 31–60 days
• [ ] Escalate anything over 60 days with a date and an owner
• [ ] Flag any customer who's more than 25% of your AR
• [ ] Update DSO once a month

How HelloBooks helps

AR aging and AP aging are included on the Free plan, along with invoices and unlimited email payment reminders, so you can run the report and send the follow-ups from the same place. Customer payments come in through your bank feed (you can connect most US banks and credit cards, or upload a CSV statement) and land in a review list. Make sure each one is recorded against the invoice it paid before you run the report, because an unrecorded payment makes a paid invoice look overdue. More on the invoicing side is on the invoice software page.

On Pro, AI Analysis runs on every report, including your receivables, which can help you spot slow-paying patterns sooner. If you'd rather a bookkeeper handle collections reviews, you can invite them into the same books. If you're comparing what each tier includes, see free vs paid accounting software.

FAQs

How often should I run an AR aging report?

At least monthly as part of your close. If your receivables are more than a month of sales or cash is tight, run it weekly.

What's a good DSO for a small business?

It depends on your terms. A useful target is DSO within about 10 to 15 days of your standard terms. If you invoice Net 30 and your DSO is 60, customers are effectively taking double the time you offered.

Why does a paid invoice still show on my aging report?

Usually because the payment was recorded but not applied to the invoice, or it's sitting in the bank feed unmatched. Matching the deposit to the invoice clears it.

Should I charge late fees?

You can, if your terms say so up front and the fee follows your state's rules. Many small businesses find a clear reminder schedule works better than fees, and keeps the relationship intact.

When should I write off a bad debt?

When you've made reasonable efforts to collect and it's clear the money isn't coming. Your CPA can tell you how to record it for your books.

Does AR aging work with cash-basis accounting?

You can still track unpaid invoices on a cash basis, but they aren't counted as revenue until paid. The aging report is still useful for collections.

Five customers, five minutes, and a clear next step for each. That's a good Monday.

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