Accounts Receivable Aging

Accounts receivable aging is a method of tracking the age of outstanding invoices. It is used to manage cash flow and identify customers who are at risk of default.

The aging schedule is a report that shows the total amount of receivables, the number of days each invoice has been outstanding, and the percentage of receivables that are past due. The aging schedule can be used to identify customers who are at risk of default.

There are several ways to calculate the aging schedule. The most common method is to use the following formula:

**Accounts receivable aging = (total amount of receivables * number of days outstanding) / total number of invoices**

For example, if a company has $100,000 in receivables and 100 invoices, the aging schedule would be as follows:

* 0-30 days: $50,000 (50%)
* 31-60 days: $30,000 (30%)
* 61-90 days: $10,000 (10%)
* Over 90 days: $10,000 (10%)

The aging schedule can be used to identify customers who are at risk of default. For example, the company in the example above has $10,000 in receivables that are over 90 days old. This means that the company is at risk of not receiving payment for these invoices.

The aging schedule can also be used to manage cash flow. By identifying customers who are at risk of default, the company can focus its collection efforts on these customers. This can help to improve the company's cash flow.

Accounts receivable aging is an important tool for managing cash flow and identifying customers who are at risk of default. By using the aging schedule, companies can improve their financial health.