Accounts receivable ageing
What is accounts receivable ageing? A list of what customers owe you, grouped by how late each invoice is, usually in 30-day steps.
In plain words
Ageing answers one question: of the money customers owe me, how much is recent and how much is old? Each unpaid invoice goes into a group by how many days late it is: not yet due, 1 to 30 days late, 31 to 60, and so on.
A worked example
A trading company is owed ₹5,00,000 across all its customers.
| Group | Owed | Share |
|---|---|---|
| Not yet due | ₹2,40,000 | 48% |
| 1 to 30 days late | ₹1,10,000 | 22% |
| 31 to 60 days late | ₹85,000 | 17% |
| 61 to 90 days late | ₹40,000 | 8% |
| More than 90 days late | ₹25,000 | 5% |
| Total | ₹5,00,000 | 100% |
30% of the money (₹1,50,000) is already more than 30 days late. That is where the collections team starts, oldest and largest first. Ageing can be counted from the due date or from the invoice date, so ask your CA or lender which one they expect.
Why it matters
- Cost. Money stuck in the older groups is money you may be borrowing against, and the older an invoice, the harder it is to collect.
- Deadline. Auditors and banks ask for the ageing at year end and at loan renewals. Whether an old balance is written off is a decision for you and your CA.
- Risk. A customer who is slowing down shows up here before it shows up in the bank.
See your own receivables grouped by days late.
In Kinnow
How Kinnow handles it
Account has an ageing report that lists customers one by one, with the invoices behind each total. The groups start as not yet due, 1 to 30, 31 to 60, 61 to 90 and over 90 days, and your administrator can change the day ranges in Finance Settings.
The Collections agent drafts overdue reminders and steps them up by how many days late each payment is. A person approves each reminder before it goes out. To tie the figures to what a customer sees on their own statement, see reconcile ageing to a customer's statement.
The ageing follows what is posted in your books. A receipt that has not been recorded yet still shows as owed.
Questions
What is accounts receivable ageing?
A list of what customers owe you, grouped by how late each invoice is, usually in 30-day steps.
Can I change the day ranges?
Yes. Your administrator can change the ageing ranges in Finance Settings. A different range can also be set for one company in a group.
Does Kinnow send reminders by itself?
No. The Collections agent drafts each reminder, with its reasons, and a person approves it before it goes out.
Ask us to age your receivables the way your bank and auditor ask for them.