Cash flow
AR aging report, with the collections actions attached.
Every unpaid invoice bucketed by how late it is, plus what you should be doing at each bucket.
Every unpaid invoice bucketed by how late it is, plus what you should be doing at each bucket.
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Accounts receivable aging report
Excel (.xlsx) · 2 tabs · no email required
What is in the file
An aging report answers one question: of the money customers owe you, how much is late, how late, and who has it. Every accounting system produces one. Almost nobody acts on it, which is why the average small business carries a receivables balance twice as large as its payment terms imply it should. How to read an AR aging report covers the benchmarks and the weekly cadence in full.
| Bucket | What it usually means | What to do |
|---|---|---|
| Current | Invoiced, not yet due | Nothing. Confirm it was received if it is large. |
| 1–30 days | Usually an admin failure — wrong contact, missing PO | Email the AP contact. Most of this bucket clears on the first reminder. |
| 31–60 days | The invoice is in a queue or being disputed | Phone call. Find out which, because they need different fixes. |
| 61–90 days | There is a problem they have not told you about | Escalate to whoever bought the thing, not to AP. |
| 90+ days | Roughly half of this will never be collected | Decide: collections agency, payment plan, or write it off. |
The bucket boundaries are conventional, not meaningful in themselves. What makes the report useful is that each bucket implies a different action, and the action changes the outcome — the recovery rate on an invoice falls sharply the longer it sits, and by twelve months it is well under half.
DSO converts the receivables balance into a number of days, which makes it comparable across months as revenue grows. The template calculates it as receivables divided by revenue, times the number of days in the period.
Read it against your own payment terms rather than against an industry benchmark. If you invoice on net 30 and your DSO is 38, you are doing fine. If it is 62, you are financing your customers' working capital with your own — at a scale that is usually larger than any other financing decision the company has made.
Invoice on the day the work is delivered, not at month end. A 30-day payment term starting two weeks late is a 45-day term, and batching invoices at month end is the most common self-inflicted cause of a high DSO. It is also the easiest thing on this page to fix.
The summary tab sorts by customer for a reason. A receivables balance that is 70 percent one customer is a different risk from the same balance spread across forty, even though the aging profile looks identical. Look at the top three rows before you look at the buckets.
Weekly during the collections call, not monthly at close. Aging is one of the few reports where the value comes from frequency — a 40-day-old invoice you notice this week is materially more collectible than the same invoice noticed in three weeks.