What is accounts receivable aging?

Accounts receivable aging is the process of distinguishing open accounts receivables based on the length of time an invoice has been outstanding. Accounts receivable aging is useful in determining the allowance for doubtful accounts. The aged receivables report tabulates those invoices owed by length, often in 30-day segments, for quick reference.

How can management use an accounts receivable aging report?

Management may also use an aging report to help set credit policies and monitor customer credit quality. Below are a few ways that company management can use an accounts receivable aging report: One of the ways that management can use accounts receivable aging is to determine the effectiveness of the company’s collections function.

What is an aged receivables report?

The aged receivables report tabulates those invoices owed by length, often in 30-day segments, for quick reference. Accounts receivable aging is used to estimate the value of receivables that the company does not expect to collect. This information is used to adjust the company's financial statements to avoid overstating its income.