Financial metrics glossary
Accounts receivable aging: definition, formula and example
Accounts receivable aging is a report that groups a company's unpaid customer invoices by how long they have been outstanding, usually in 30-day buckets past the due date. It shows how much of the receivables balance is current, how much is late and which customers owe the oldest amounts.
Updated
Formula
- Days past due = Report date − Invoice due date
- Buckets: current, 31–60, 61–90 and over 90 days past due
- Bucket share = Bucket total ÷ Total receivables × 100%
Worked example
SampleSAMPLE · Northbridge Analytics, September 2026
Northbridge Analytics, the fictional software company in the Financial Analyst's public sample, at the end of September 2026: its open customer invoices, grouped by days past the due date:
| Bucket | Amount | Share |
|---|---|---|
| Current (not yet due, or up to 30 days past due) | $127,700 | 65.6% |
| 31–60 days past due | $19,000 | 9.8% |
| 61–90 days past due | $48,100 | 24.7% |
| Over 90 days past due | $0 | 0.0% |
| Total receivables | $194,800 | 100.0% |
- More than 30 days past due = $19,000 + $48,100 + $0 = $67,100
- Share = $67,100 ÷ $194,800 × 100% = 34.4%
Receivables more than 30 days past due: $67,100 (34.4%)
The total is the receivables figure the sample report prints. Its largest single balance, $41,400 owed by Helix Robotics, is 21.3% of receivables.
How to read it
- Watch the share of receivables in the oldest buckets, not only the total. A steady total can hide invoices moving from 31–60 into 61–90 days.
- Aging can run from the invoice date or from the due date. Aging from the due date shows lateness against the agreed terms; aging from the invoice date also counts the time the customer is allowed to take.
- Some reports split invoices not yet due from those 1–30 days past due; others, like the example above, count everything up to 30 days past due as current. Compare reports built the same way.
- Aging and DSO answer different questions. DSO is one average; the aging shows whether a high DSO comes from many slightly late customers or from one large invoice months overdue.
- Invoices in the oldest buckets are where a doubtful-debt allowance starts: an estimate of what will not be collected, expensed before the loss is final.
Original research: Financial benchmarks for small US public companies, by industry →
Where it shows up in the monthly management report
The report's “Cash and working capital” page shows receivables in total with days sales outstanding, and lists the customers with the largest balances, each with its share of receivables.
When days sales outstanding moves off its target, the explanation names the customers with the largest overdue balances and how many days past due the oldest invoice is — read from the open invoices in your accounting system.
- Open the sample workspace — a fictional company's books, worked by the Financial Analyst, with its monthly report. No signup.
- The Financial Analyst — what it reads from your accounting system, what the report contains and what it costs.
- The AR Cash Collector — follows up on overdue invoices, the receivables that age and lift DSO.
Related metrics
-
Days sales outstanding (DSO)
The average number of days customers take to pay their invoices.
-
Cash conversion cycle (CCC)
Days from paying suppliers to collecting from customers: DSO + DIO − DPO.
-
Working capital
Current assets minus current liabilities, in dollars.
Frequently asked questions
What is an aging report used for?
To decide whom to chase first, to spot customers who are slipping, and to estimate how much of the receivables balance may never be collected — the starting point for a doubtful-debt allowance.
What are the usual aging buckets?
Most reports use 30-day buckets: current, 1–30, 31–60, 61–90 and over 90 days past due. Some group current and 1–30 together; what matters is using the same buckets every period.
How is AR aging different from DSO?
DSO is a single average number of days to collect. The aging report shows the distribution behind it — how much is current, how much is late and by how long — and which customers owe it.
How do you reduce overdue receivables?
Invoice promptly and accurately, follow up as soon as an invoice passes its due date, chase the oldest balances first, and agree a payment plan where a customer cannot pay in full.