Accounts Receivable Aging

Often nicknamed "the aging report," receivables aging is a management tool. It helps companies know which specific customers to send to collections, which ones to target for follow-up invoices, and whether the accounting department is collecting receivables too slowly.

Companies can also use an aging report to determine whether it is taking on too much credit risk. Aging reports also guide company billing policies. If the company requires payment within 30 days, but most customers are blowing that off and paying in 60 days instead, the company might see this in the aging report and consider changing its policy.