Accounts receivable aging is an important process used in financial management and accounting to gain a better understanding of a company’s total value of unpaid invoices. In simple terms, accounts receivable aging, also known as A/R aging or debtor aging, is a report that consists of the current list of receivables (amounts owed by customers) that have been arranged according to the length of time an invoice has been outstanding. Aging is typically tracked in 30-day intervals, with the oldest being 30 days past due, next being 31-60 days past due and so on.

Aged receivable reports act as the primary asset for credit management and are used by accountants and finance officers to review the company’s current receivables, to ensure that payments are being made in a timely fashion, and to estimate the possible bad debts. When creating aging reports, companies typically categorize current unpaid receivables into buckets. A typical categorization could be amounts due within 30 days, 31 to 60 days, 61 to 90 days, and so on.

The important outcomes of accounts receivable aging are related to the allowance for doubtful accounts. By reviewing a company’s accounts receivable aging report, it's possible to create more accurate predictions about how much is not collectible, and the company can adjust the income line that is reported to the public. This is important to ensure that financial statements are accurate and do not overstate the actual income of the business.

Accounts receivable aging can provide a detailed quantitative and qualitative summary of a company’s receivables. The process of aging the receivables can be carried out manually or through the use of accounting software. With the reporting capabilities of today's accounting programs, it’s easier than ever to quickly generate a series of aging reports for a company's accounts receivable. This quick and easy access to the accounts receivable information makes it easier to track unpaid invoices, encourage payment and better manage the risk of bad debt.