Glossary / A/R Aging
A/R Aging(Accounts Receivable Aging)
Accounts receivable aging (A/R aging) is a report that buckets unpaid customer invoices by how long they've been outstanding — typically 0-30, 31-60, 61-90, and over 90 days. The longer an invoice ages, the less likely it is to be collected. A/R aging is a leading indicator of cash flow problems and customer health.
Formula
Each unpaid invoice is bucketed by its age (days since invoice date) into 0-30, 31-60, 61-90, or 90+ days outstanding.
Example
A B2B business has $500K in unpaid invoices: $300K in the 0-30 bucket, $120K in 31-60, $50K in 61-90, $30K in 90+. The 90+ bucket is at risk; collections effort should focus there. The 31-60 bucket is the leading indicator — if it grows month-over-month, cash flow trouble is coming.
Why it matters
A/R aging is the single best leading indicator of B2B cash flow. Watching the 31-60 and 61-90 buckets month-over-month catches collection problems weeks before they hit the bank account.
Related terms
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