Accounts Receivable Aging: Definition, Uses, and More

MHC Team   October 7th, 2021 

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Running a business can be extremely difficult. One of the most important tasks is to ensure that you are receiving all of your payments in a timely manner. The lack of visibility into late payments is a major issue for businesses focused on growth. If a business is not aware of all outstanding balances and the exact length of time those balances have been unpaid, they’re missing important data that can help inform important decision-making.

We will discuss the importance of tracking past due balances, also known as accounts receivable aging, and the best methods for doing so.

What Is Accounts Receivable Aging?

Accounts receivable aging gauges the unpaid, open accounts receivables based on the length of time they have been outstanding.

Visibility into accounts receivable aging gives companies better insight into troublesome client relationships and the current health of their business. It can also help inform better tactics for customer management and future growth.

Accounts Receivable Aging Report

The accounts receivable aging report is how accounts receivable aging is identified and managed. It’s one of the most important reports for businesses, according to, because it visualizes the information related to accounts receivable aging, including the amount of money that is outstanding and how much time has passed.

Here’s an example of an accounts receivable report:



1-30 DAYS










31-60 DAYS

90+ DAYS

61-90 DAYS










In this case, the accounts receivable report is run every 90 days, so it shows all outstanding accounts receivables from that time period. Company #1 has not paid any of the $500 balance on their account in the 90 day period, while Company #2 and Company #3 have paid down their total in part or fully.

How Accounts Receivable Aging Is Used

Accounts receivable aging provides a detailed, birdseye view of a company’s outstanding accounts receivables over a specified period of time. It’s used to identify roadblocks in current business processes as well as in client relationships.

In general, accounts receivable aging helps gauge efficacy of internal collections practices, assess credit risk, and determines doubtful accounts allowances.



Sometimes, the accounts receivable report may point to issues that exist internally. For example, if several clients have unpaid balances, it’s possible that invoices are being lost in transit, whether by mail or electronically. Or, if successful and timely delivery is confirmed, maybe a late fee statute needs to be put in place to expedite payments. If the number of unpaid invoices listed in the aging report is growing, it may be an indication that changes should be made.


If accounts receivable payments are often going unpaid for extended periods of time, your business could be at credit risk. For example, if $25,000 has gone unpaid for 60 days, that deficit could be affecting your business’s funds and your ability to make necessary purchases. If funds are running low, employees or vendors might not get paid on time and your business may begin to suffer.

The accounts receivable report will help you catch large accounts that have not been paid before they become an issue.

credit risk


What happens when the report identifies a longstanding unpaid account? This is called a doubtful account, and depending on how long debt has remained, you may need to assume that the client will default on the payment.

While it is always frustrating to have defaulted accounts, being able to anticipate them before they occur can help with financial planning. Plus, it’ll help you end client relationships sooner (therefore incurring less debt) if you can determine that they aren’t keeping up with their payments.

The Right AR Aging Tools

Accounts receivable aging is a valuable practice for companies to monitor outstanding payments before they become a major issue. Though accounts receivable aging, and by extension, accounts receivables, are critical to any business being able to function, it can be hard to keep track of all invoices and other accounts receivable activities.

Many companies struggle to keep both outgoing and ingoing invoices organized, especially when digital and physical forms are in play. Plus, it’s time-consuming to enter data from invoices, and manual entry is prone to error.

Choosing a method for housing and organizing accounts receivable processes using automation will help your business save time, reduce data entry errors, and keep up with accounts receivable aging reports. Check out MHC to learn more!

Team MHC

Team MHC consists of a multitude of roles, functions, and expertise within MHC. With extensive combined experience in accounts payable and customer communication management, Team MHC has a unique insight into how to empower people using solutions that streamline processes while enhancing customer communication. Working alongside field experts in various industries and company sizes, Team MHC has garnered impressive thought leadership knowledge that we are excited to share with our readers. Including Aragon’s 2022 Women in Tech winner Gina Armada, CTO Dan Ward, VPs of Finance and Customer Service, and other talent that runs the spectrum of technology ability, Team MHC offers a mastery of skills to benefit our customers and prospects alike.


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