How to Read an Accounts Receivable Aging Report
An accounts receivable aging report sorts every unpaid invoice into buckets by how overdue it is, so you can see at a glance which customers need a reminder and which need a harder conversation.
What an Aging Report Shows
An aging report lists every customer with an unpaid balance and splits that balance across columns based on how long each invoice has been outstanding, typically counted from either the invoice date or the due date. It turns a single accounts receivable total into a view of exactly where the risk sits — a $50,000 balance that's all current is a very different situation from the same total with $20,000 sitting 90+ days overdue.
The 30/60/90/90+ Buckets
| Bucket | What it means | Typical risk |
|---|---|---|
| Current | Not yet due, or within terms | Low — normal trading |
| 1–30 days overdue | Just past the due date | Low — often an oversight, resolves with a reminder |
| 31–60 days overdue | A month or more late | Moderate — needs direct follow-up, not just a reminder |
| 61–90 days overdue | Two months or more late | Elevated — consider a credit hold on new orders |
| 90+ days overdue | Three months or more late | High — formal escalation or write-off review |
Reading One in Xero
In Xero, the Aged Receivables Summary (under Accounting → Reports) shows this exact breakdown by customer, with a Detail version that lists individual invoices inside each bucket. Because PaidTerms connects directly to Xero, invoices settled through PaidTerms are reconciled as paid rather than sitting in these aging buckets — see how the Xero integration works.
When to Take Action on Each Bucket
- Current: no action needed beyond normal invoicing.
- 1–30 days: a single friendly reminder is usually enough.
- 31–60 days: a direct call or message asking for a specific payment date — see what to do when a customer pays an invoice late.
- 61–90 days: review whether to pause further credit to that customer until the balance clears.
- 90+ days: formal demand, debt collection, or write-off assessment — see what happens if a customer doesn't pay your invoice in NZ.
Frequently Asked Questions
How often should I review an aging report?
Weekly is typical for a business with regular trade credit customers. Monthly is usually too infrequent to catch a slow-paying account before it becomes a larger problem.
Should the aging report use invoice date or due date?
Due date, for collections purposes — it tells you how overdue the payment actually is relative to the agreed terms, rather than how long the invoice has simply existed.
What's the difference between an aging report and debtor days?
Debtor days is one summary number for the whole ledger; an aging report breaks the same balance down by invoice and by how overdue each one is. See what debtor days are and how to calculate them.
Does one large overdue invoice distort an aging report?
Yes, significantly. Always check a handful of individual invoices behind a large balance in the older buckets before concluding your whole customer base is paying slowly — a report dominated by one or two accounts needs a different response to a broadly slow-paying ledger.
Fewer Invoices Sitting in the Older Buckets
PaidTerms connects to Xero and settles eligible invoices upfront, so they're reconciled as paid instead of aging through 30, 60 and 90-day buckets.
Read next: what debtor days are and how to calculate them.
