Accounts Receivable Aging

It’s a listing of all the company’s customers, how much they owe, and how long ago they were invoiced.

Usually, it’s a columned sheet that has customer invoices grouped for less than 30 days outstanding, 31-60 days outstanding, etc. It’s a quick look at how well customers are paying. Are there a lot of very overdue invoices? Then the company has a crappy credit policy, or is poor at collections, or their customers are falling on hard times...none of which is a good sign.

Saw It, Inc. makes chainsaws. The company sees receivables aging for its top customer, Tree Cutz, LLC, go from 37 days to 54 days. Tree Cutz was hit with a lawsuit over a tree that crushed a car, and is running low on cash. The faster Saw It can collect its money from customers like Tree Cutz, the more efficiently it can use its capital, such as investing in making a new, patented, autonomous chainsaw. Time is money in this case, so keeping customer invoices from “aging” is a must.