Accounts Receivable Aging

Accounts receivable aging (or an "aging report") is a financial report that sorts a company's accounts receivable by how many days ago each unpaid invoice fell due. Instead of looking at a single "total debt" number, the aging report breaks it down into aging buckets (typically 0-30, 31-60, 61-90 and more than 90 days), which reveals which part of the balance is recent and collectible and which part is aging and becoming risky.

Its value lies in turning a flat accounting figure into a prioritization tool: the collections team knows whom to call first, finance estimates how much debt could become uncollectible and leadership understands the real health of working capital. It is the basis for calculating metrics such as DSO and for setting the allowance for doubtful accounts.

When this follow-up is automated with reminders and messages segmented by bucket, it becomes part of what an automation platform like Revio orchestrates: instead of static spreadsheets, each customer receives the right collection message based on how old their debt is.

How an aging report is built

The report starts from the customer ledger: you take each invoice pending collection and calculate the days elapsed since its due date (not since it was issued). The balances are then grouped by customer and placed into aging columns. The result is a matrix where the rows are customers and the columns are the buckets of days past due, with a total per customer and a grand total per bucket at the bottom.

A simplified aging report looks like this (amounts in Argentine pesos):

The reading is immediate: Distribuidora del Sur has a healthy portfolio (everything is recent), while Comercial Andina concentrates old debt that requires urgent action. That contrast is exactly what a balance sheet doesn't show.

Why it matters for the business

In an environment like Argentina's, where inflation erodes the value of every peso collected late, the aging report stops being an accounting document and becomes a profitability lever. An invoice collected at 90 days can be worth considerably less in real terms than one collected at 30. The aging report lets you:

• Prioritize collections by amount and age, instead of calling customers at random.
• Estimate the allowance for doubtful accounts, applying increasing risk percentages to the oldest buckets.
• Spot problem customers before the debt becomes uncollectible.
• Negotiate with banks and suppliers by showing an organized, predictable receivables portfolio.
• Decide whether to keep selling on credit to an account that is already carrying overdue balances.

A concrete example

A consumer goods company that distributes to convenience stores and small self-service grocers reviews its aging report and discovers that 18% of its receivables are in the 90+ day bucket, almost all of it concentrated in about ten small stores. With that information, it stops new credit shipments to those accounts, assigns a collections specialist to the 61-90 day bucket to keep it from rolling into 90+, and books a realistic allowance for doubtful accounts. Without the aging report, that 18% would have kept showing up as a "collectible" asset, inflating the balance sheet.

In the United States, the aging report is a standard tool of accounts receivable management, and the aging method has long been one of the most common ways to estimate the allowance for doubtful accounts under US GAAP. Under the current expected credit loss model (CECL, ASC 326), many companies still use aging schedules as the starting point for estimating expected losses on trade receivables, adjusted for current conditions and reasonable forecasts.

Common mistakes

• Calculating age from the issue date instead of the due date, which distorts what is actually past due.
• Looking only at the total and not at the distribution across buckets: two companies with the same total debt can have portfolios with opposite risk profiles.
• Not updating the report frequently: an aging report from two months ago no longer reflects the reality of collections.
• Not reconciling the aging report with credit notes, advance payments and partial payments, which muddies the balances.

How it differs from DSO

The aging report and DSO are complementary, but they answer different questions. The aging report is a granular detail (which debt, owed by whom, for how many days), while DSO is a summary metric (on average, how many days it takes the company to collect).

In practice, the aging report feeds the DSO calculation and gives it context: if DSO goes up, the aging report explains which bucket is getting older and why.