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An Aging Schedule organizes outstanding Accounts Receivable according to how long amounts have remained unpaid. Businesses use aging schedules to monitor overdue customer balances, prioritize collections, evaluate credit risk, and better understand the timing of expected Cash receipts.
Reading time: 8 minutes
Category: Accounts Receivable & Collections
Definition: An Aging Schedule is a structured breakdown of outstanding Accounts Receivable based on the length of time customer balances or invoices have remained unpaid.
Receivables are commonly grouped into aging categories, or aging buckets, such as:
The exact aging categories can vary by business and reporting system.
An Aging Schedule helps a company distinguish recently issued or recently due receivables from balances that have remained unpaid for longer periods.
For example, knowing that a company has:
$500,000 in Accounts Receivable
provides useful information.
But an Aging Schedule can provide additional context by showing:
Current: $300,000
1–30 days past due: $100,000
31–60 days past due: $50,000
61–90 days past due: $30,000
More than 90 days past due: $20,000
Both views show $500,000 of Accounts Receivable, but the aging information provides a clearer picture of collection timing and overdue balances.
Businesses can use this information to identify customers requiring follow-up, evaluate collection performance, and investigate balances that may be becoming difficult to collect.
An Aging Schedule is closely related to an Accounts Receivable Aging Report.
In practice, the terms may sometimes be used interchangeably. More specifically, the aging schedule describes the organization of outstanding balances by age, while an Accounts Receivable Aging Report is a report that presents that aging information, often by customer and invoice.
The total Accounts Receivable balance alone does not show how long customers have owed the business money.
An Aging Schedule adds a time dimension to Accounts Receivable.
It can help businesses:
Older receivables can require additional attention because the longer an invoice remains unpaid, the greater the possibility that collection may become difficult.
However, an old balance does not automatically mean that it is uncollectible.
A balance may remain outstanding because of:
The Aging Schedule helps identify which balances need investigation.
Management can then determine the appropriate action.
Aging Schedules commonly divide receivables into time-based categories.
The exact categories and calculation methodology can vary by business, but a common structure includes the following.
The Current category generally contains invoices that have not yet become past due based on their Payment Terms.
For example, an invoice with Net 30 terms may remain Current until its Due Date passes.
These balances have recently passed their Due Date.
They may require an initial payment reminder or customer follow-up.
Balances in this category have remained unpaid for a longer period.
Businesses may increase collection activity and investigate why payment has not been received.
These receivables may require more active collection attention.
Management may review:
These balances have remained unpaid for an extended period.
Businesses may need to evaluate whether additional collection efforts, a Payment Plan, collection escalation, Bad Debt treatment, or another action is appropriate.
The correct action depends on the circumstances surrounding the customer and receivable.
An invoice should not automatically be Written Off simply because it enters an older aging category.
Example: Suppose a distributor has five customers with outstanding receivables.
Current invoices:
$40,000
1–30 days past due:
$25,000
31–60 days past due:
$15,000
61–90 days past due:
$10,000
More than 90 days past due:
$10,000
The Aging Schedule would show:
Current: $40,000
1–30 days past due: $25,000
31–60 days past due: $15,000
61–90 days past due: $10,000
90+ days past due: $10,000
Total Accounts Receivable: $100,000
At first glance, the company has:
$100,000 in Accounts Receivable
But the Aging Schedule reveals that:
$60,000 is already past due
and:
$20,000 has been outstanding for more than 60 days past its Due Date.
Management can now investigate the older balances.
Suppose Customer E's $10,000 balance is more than 90 days past due.
The Accounts Receivable team reviews the account and discovers that:
$4,000 relates to a customer dispute
$3,000 is covered by an agreed Payment Plan
$3,000 has had no recent customer response
Those balances may require different actions even though all three appear in the same aging category.
This demonstrates an important point:
Aging identifies which receivables require attention.
It does not, by itself, determine the appropriate collection or accounting treatment.
An Aging Schedule can provide valuable insight into Accounts Receivable, but its usefulness depends on accurate invoices, Due Dates, Payment Terms, payments, Credit Memos, and customer account records.
Common challenges include:
For example, suppose an Aging Schedule shows a:
$25,000 balance more than 90 days past due.
That information should trigger investigation, but it does not explain why the balance remains unpaid.
The balance could represent:
An effective Accounts Receivable process therefore combines aging information with customer-level investigation and collection activity.
Aging Schedules can help businesses make decisions involving collections, customer credit, Cash Flow, and Working Capital.
Management may use aging information to evaluate:
For example, two companies could each report:
Accounts Receivable: $1,000,000
Company A might have:
$850,000 Current
and only:
$50,000 more than 60 days past due.
Company B might have:
$450,000 Current
and:
$300,000 more than 60 days past due.
The total Accounts Receivable balance is identical.
The collection profile is not.
An Aging Schedule provides the additional information needed to identify that difference.
The terms Aging Schedule and Accounts Receivable Aging Report are often used in closely related ways and may sometimes be used interchangeably.
Conceptually, however, there is a useful distinction.
An Aging Schedule refers to the organization of outstanding receivables into categories based on their age.
For example:
Current
1–30 days past due
31–60 days past due
61–90 days past due
90+ days past due
An Accounts Receivable Aging Report is the actual report used to present aging information.
Depending on the system, it may show details such as:
Aging Schedule → Method of organizing receivables by age
AR Aging Report → Report presenting the aging information
In everyday business usage, the distinction may not always be maintained, so users should understand that both terms commonly refer to closely related Accounts Receivable aging information.
Accounts Receivable aging determines how long an outstanding invoice or balance has remained unpaid according to the aging methodology used by the business or accounting system.
A common approach is to evaluate an invoice relative to its Due Date.
Suppose an invoice has:
Invoice Date: January 1
Payment Terms: Net 30
Due Date: January 31
If the invoice remains unpaid after January 31, the balance begins becoming past due.
Depending on the report date and system configuration, it can then move through categories such as:
Current
1–30 days past due
31–60 days past due
61–90 days past due
90+ days past due
For example, if the invoice remains unpaid 45 days after its Due Date, it would generally fall within a:
31–60 days past-due category
under that aging structure.
However, businesses and software systems can use different aging conventions.
Some aging reports may calculate age using:
This is why users should understand the methodology behind a particular Aging Schedule rather than assuming every system calculates aging identically.
If a customer makes a partial payment, the remaining unpaid amount generally continues to appear in Accounts Receivable until settled or otherwise resolved.
For example:
Original invoice: $10,000
Customer payment: $6,000
Remaining balance: $4,000
The Aging Schedule should reflect the remaining outstanding amount according to the applicable aging methodology.
An applicable Credit Memo can reduce the amount a customer owes when properly recorded and applied.
This can change the outstanding balance appearing on the Aging Schedule.
Accurate payment and Credit Memo application is therefore important for reliable aging information.
Both an Aging Schedule and Days Sales Outstanding (DSO) can help businesses evaluate Accounts Receivable performance, but they provide different perspectives.
An Aging Schedule organizes outstanding receivables according to age.
It can help answer:
Which invoices are overdue?
Which customers have older balances?
How much Accounts Receivable is in each aging category?
Which balances require collection attention?
DSO is a financial metric used to evaluate how long, on average, a business takes to collect receivables, based on the particular DSO calculation being used.
It provides a broader measure of collection performance.
Aging Schedule → Detailed view of outstanding receivables by age
DSO → Summary metric for overall receivables collection performance
The two are most useful when considered together.
For example, DSO may indicate that collections are slowing overall.
The Aging Schedule can then help management identify:
An Aging Schedule can serve as a practical collection-management tool.
Rather than treating every outstanding invoice the same way, businesses can prioritize collection activity according to invoice age, customer circumstances, amount owed, and collection history.
A simplified collection workflow may look like this:
Monitor the balance and confirm that invoices and supporting documentation have been delivered correctly.
Send a payment reminder or contact the customer to confirm payment status.
Verify:
Increase follow-up and determine whether a specific issue is delaying payment.
Possible actions can include:
Older balances may require escalation.
Businesses may review:
Long-outstanding balances may require a more detailed review.
Depending on the circumstances, potential actions can include:
The appropriate action should depend on the facts surrounding the receivable.
Aging alone should not automatically determine whether an invoice is Written Off.
Accounting and Accounts Receivable software can help businesses maintain the transaction information needed to generate and review aging information.
Depending on system capabilities, software can help businesses:
An integrated system can also connect aging information with the business activity that created the receivable.
A typical process may look like:
Customer → Sale → Invoice → Due Date → Accounts Receivable → Aging → Collection → Payment
When a payment is received and correctly applied, the outstanding Accounts Receivable balance can be updated accordingly.
CustomBooks connects sales, customer invoicing, Accounts Receivable, payments, accounting, and other operational activity.
This connected information can help businesses maintain greater visibility into outstanding customer balances and the transactions behind those balances.
To better understand Aging Schedules and how businesses manage outstanding receivables, these related glossary terms may also be helpful:
An Aging Schedule organizes outstanding receivables into categories based on how long the balances have remained unpaid according to the aging methodology being used.
Common categories include:
An Accounts Receivable Aging Schedule helps businesses identify overdue balances, prioritize collections, monitor customer payment behavior, evaluate potential collection problems, and understand the age of outstanding Accounts Receivable.
The terms are closely related and may sometimes be used interchangeably.
More specifically, an Aging Schedule describes the organization of receivables into age categories, while an Accounts Receivable Aging Report presents that aging information in report form, often with customer and invoice-level detail.
It depends on the aging methodology and software configuration.
A common approach evaluates how long an invoice has been past its Due Date, but some reports or systems may age balances from the Invoice Date or use another configured basis.
Businesses should verify how their particular Aging Schedule is calculated.
Not automatically.
A balance that is more than 90 days past due may require additional investigation and collection attention, but age alone does not necessarily determine whether a receivable should be classified as Bad Debt or Written Off.
The business should consider the circumstances, collection history, applicable accounting policies, and likelihood of collection
Knowing the total amount of Accounts Receivable is useful.
Knowing which customers owe it, which invoices are overdue, and how long those balances have remained outstanding provides significantly more actionable information.
For product-based businesses, customer activity can flow through several connected processes:
Sale → Invoice → Accounts Receivable → Aging → Collection → Payment → Cash
When customer invoices, payments, sales, and accounting information are maintained in disconnected systems, collection teams may spend additional time determining what customers owe and why balances remain outstanding.
CustomBooks connects sales, customer invoicing, Accounts Receivable, payments, accounting, and other operational activity, helping businesses maintain greater visibility into customer balances and the transactions behind them.
Schedule a CustomBooks demo to see how connected accounting and operational information can help your team manage Accounts Receivable more effectively.
