Buying and selling
What is an ageing report? Debtors ageing explained
Definition
Ageing report: An ageing report groups unpaid invoices by how long they are overdue, such as 1 to 30, 31 to 60 and over 90 days, to show who to chase first.
Also called: Aging report, Debtors ageing, Receivables ageing, Accounts receivable ageing, Payables ageing
What an ageing report shows
An ageing report, also called debtors ageing or receivables ageing, lists the money customers owe you and sorts it into buckets by age. The same report for suppliers, payables ageing, shows what you owe and how late it is. Typical buckets are not yet due, 1 to 30 days, 31 to 60, 61 to 90, and over 90 days.
Age can be counted from the invoice date or from the due date. Counting from the due date shows how late a payment really is, because a customer on 45-day terms is not late on day 40.
How to use a debtors ageing report
Read it every week or two, not only at year end:
- Chase the oldest and largest balances first. Money more than 90 days late is the hardest to collect.
- Watch for customers moving into older buckets month after month, and shorten their terms or ask for advance payment.
- Compare the overdue total with your monthly sales. If overdue keeps rising while sales are flat, your working capital is stuck with customers.
- Run payables ageing before you pay suppliers, so you pay what is due first and keep good suppliers on side.
Common ageing report mistakes
Ageing from the invoice date makes customers on long terms look late when they are not. Leaving out part payments, returns and credit notes makes balances look higher than they are, which leads to awkward calls. Another is treating the report as a list of bad customers: a balance can sit in the 31 to 60 bucket because one invoice is disputed, so ask before you stop supplies. Sending each customer a statement with their own ageing often settles disputes about which invoices are still open.
Worked example
A distributor's ageing on 31 October
A Patna FMCG distributor is owed ₹6,40,000 by 22 retailers. The ageing shows ₹2,90,000 not yet due, ₹1,85,000 at 1 to 30 days, ₹95,000 at 31 to 60 days, ₹40,000 at 61 to 90 days and ₹30,000 over 90 days. So ₹3,50,000, about 55% of the total, is overdue. The ₹70,000 that is more than 60 days late sits with four shops, so the owner calls those four this week before taking new orders from them.
In managemate
managemate ages balances from the due date, not the invoice date. On the dashboard, the Money owed chart splits what customers owe you and what you owe suppliers into not yet due, 1 to 30, 31 to 60 and over 60 days late, with the overdue amount and its share of the total. Each customer's or supplier's page shows their balance and overdue amount, and the statement PDF lists their open invoices or bills with ageing in five buckets: not due yet, 1 to 30, 31 to 60, 61 to 90 and over 90 days. A statement of open invoices can be sent on WhatsApp with your UPI ID. There is no single printable ageing report of all customers; the Overdue view of invoices lists every late invoice.
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