Why accounts receivable ageing matters to a first-time founder
An accounts receivable ageing report shows who owes you money and how long each invoice has been unpaid. It can reveal collection problems before they become a cash crisis and help estimate what may never be collected. You can follow up on the highest-risk invoices first instead of treating every balance alike.
Examples of accounts receivable ageing
A design agency is owed C$90,000: C$50,000 is not yet due, C$20,000 is 1 to 30 days late, C$12,000 is 31 to 60 days late and C$8,000 is more than 60 days late. It contacts customers with the oldest invoices first and investigates any disputes.
Common misunderstanding
Ageing may start from the invoice date or the due date, and reports may group days differently. An old balance is not automatically lost, and a recent invoice is not automatically safe. Credit notes, disputes, payments not yet matched to invoices and wrong due dates can make the report misleading.
When to use it
Review the report at least monthly, and more often when cash is tight or invoice volume is high. Use it for collection calls, cash forecasts, customer credit limits and bad-debt estimates. Check that its total matches the accounting records and state whether ageing starts from the invoice date or due date.
US spelling: accounts receivable aging.