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Collections

Ageing (AR ageing)

Outstanding receivables grouped by how overdue they are, usually in 30-day buckets.

An ageing report buckets everything owed to you by how late it is: current, 1 to 30 days, 31 to 60, 61 to 90, over 90.

It is the report every collections conversation starts from, because the probability of recovery falls sharply with age. An invoice 90 days overdue is materially less likely to be paid than one at 30, which is why the buckets drive the collections priority rather than the invoice value alone.

Ageing is also where bad debt provisioning comes from: a proportion of each bucket is provisioned against, rising with age.

Related terms

  • DSO (Days Sales Outstanding) The average number of days it takes to collect payment after invoicing.
  • Collections The process of recovering invoices that are past due, from reminders through to escalation and write-off.
  • Bad debt and write-off Receivables judged uncollectable, provisioned against and eventually removed from the books.
  • Net terms How long a customer has to pay after an invoice is issued. Net 30 means thirty days.