Accounts Receivable Aging Report

An accounts receivable (AR) aging report is a financial document that groups a company's outstanding invoices into time-based categories, commonly called "buckets," based on the number of days each invoice has remained unpaid. The standard buckets are Current (not yet due), 1-30 days past due, 31-60 days past due, 61-90 days past due, and 90+ days past due. Each bucket shows the total dollar amount of receivables falling within that time range, along with the percentage of total AR it represents.

The report is generated from the company's accounting system and typically lists each customer, their outstanding invoices, the invoice dates, due dates, and the amount sitting in each aging bucket. It serves as the primary tool lenders use to evaluate the quality of a company's accounts receivable when underwriting asset-based credit facilities, factoring arrangements, and revolving lines of credit.

The AR aging report is one of the most scrutinized documents in commercial lending. For businesses that rely on receivables as collateral, the aging report directly determines how much capital they can access. Lenders use it to calculate the borrowing base, setting advance rates that reflect the actual collectibility of outstanding invoices rather than their face value.

Receivables concentrated in older buckets signal collection problems, customer disputes, or weak credit management, all of which reduce a lender's willingness to extend credit. In asset-based lending, invoices aged beyond 90 days are almost universally excluded from the eligible borrowing base. In factoring, the aging profile determines not only eligibility but also the discount rate applied to purchased invoices.

For business owners, the aging report is equally critical as an internal management tool. A deteriorating aging profile, where receivables steadily migrate from current to 60+ day buckets, is an early warning sign of cash flow stress that precedes liquidity crises by weeks or months.

Submitting stale or manually adjusted reports. Lenders expect aging reports generated directly from the accounting system, not spreadsheets with manual edits. During a field exam, auditors reconcile the aging report against source invoices. Discrepancies between the submitted report and actual records raise immediate red flags and can halt a credit facility.

Ignoring credit memos and disputed invoices. Unapplied credit memos and unresolved disputes inflate the receivables balance on the aging report, creating a misleading picture of collectible AR. Lenders calculate dilution to account for this, and high dilution rates directly reduce the eligible borrowing base.

Failing to age by invoice date versus due date. Some accounting systems default to aging from the due date rather than the invoice date. If payment terms vary across customers (Net 15, Net 30, Net 60), due-date aging can mask how long invoices have actually been outstanding. Lenders typically require aging from invoice date for consistency.

Lumping multiple invoices under a single customer total. A summary-level aging report that shows only customer totals hides the invoice-level detail lenders need. If one customer has both current and severely past-due invoices, a summary view obscures the delinquent portion. Always provide invoice-level detail.

Not reconciling the aging report to the general ledger. The total AR on the aging report must match the accounts receivable balance on the balance sheet. A mismatch suggests posting errors, timing differences, or incomplete records, any of which erode lender confidence.