Invoice Aging
Definition
Invoice aging is a report that groups unpaid invoices by how many days they are past due, typically in buckets of 0-30, 31-60, 61-90, and 90-plus.
What Invoice Aging Means for Your Business
What it means
An aging report sorts your outstanding invoices by how long they have been sitting unpaid. It is the single most important tool in collections because it tells you exactly who is slow and by how much.
Why it matters
Money owed longer than 90 days rarely gets collected at all. Tracking the aging buckets lets you focus collection effort where it pays back, and flag customers drifting toward bad debt.
How contractors use it
Controller or office manager pulls an aging report weekly, assigns collection calls to the 31-60 bucket, sends escalation letters at 61-90, and considers write-off or small claims at 90-plus.
Real-World Example
A plumbing company's aging report showed $78,000 in the 61-90 day bucket. Aggressive collection calls and payment plans recovered $62,000 within 3 weeks, saving it from write-off.
Related Terms
Accounts Receivable
Accounts receivable is the total amount of money owed to a business by customers for services already delivered but not yet paid.
Days Sales Outstanding
Days sales outstanding, or DSO, is the average number of days it takes a business to collect payment after an invoice has been issued.
Payment Terms
Payment terms are the written rules that define when and how a customer must pay for services rendered.
Net 30
Net 30 is a payment term that gives the customer 30 calendar days from the invoice date to pay the full amount due.
Invoice
An invoice is a billing document that lists the work performed, parts used, and total amount due from the customer.
Put This Into Practice with Free Software
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