What Is an Aging Report? Reading AR/AP Aging Buckets
How aging reports split receivables and payables into overdue buckets, what each bucket actually means, and the reading mistakes that hide real problems.
An aging report takes a single balance — 9,300 € of receivables — and splits it by how overdue each item is. It is the difference between knowing what you are owed and knowing whether you will get it.
The same report runs in both directions: receivables aging shows what customers owe you and how late they are; payables aging shows what you owe suppliers and how late you are. Both matter, and they are read differently.
What a receivables aging report looks like
Per partner, as of a date, in euros:
| Customer | Current | 1–30 | 31–60 | 61–90 | Over 90 | Total |
|---|---|---|---|---|---|---|
| UAB Alfa | 3,200 | 900 | — | — | — | 4,100 |
| Beta GmbH | 1,850 | — | 1,100 | — | — | 2,950 |
| Gamma SIA | — | — | — | 400 | 1,850 | 2,250 |
| Total | 5,050 | 900 | 1,100 | 400 | 1,850 | 9,300 |
The total is the same 9,300 € on the balance sheet. Everything useful is in how it distributes.
Current means not yet due — invoices inside their payment terms. This is not a problem; it is the business working normally.
1–30 days overdue is usually administrative: the invoice missed an approval cycle, the payment run happens monthly, someone was on holiday. Most of it collects itself with a reminder.
31–60 days is where intent starts to matter. At this age, either your invoice has a problem or your customer has one, and a phone call finds out which.
61–90 days is genuinely at risk. Collection probability drops steeply through this band, and an invoice that reaches it without a documented reason is usually a dispute nobody escalated.
Over 90 days is where recovery becomes the exception. This bucket is the basis for a doubtful-debt provision — see bad debt — and the honest question about it is not "when will they pay" but "what will we recover".
Reading it properly
- Read the distribution, not the total. A 9,300 € balance with 5,050 € current is healthy. The same total with 5,050 € over 90 days is a company that has already lost money and hasn't recognized it.
- Follow individual customers across periods. Gamma SIA above has 1,850 € over 90 days and nothing current — they have stopped buying and stopped paying. That combination is the clearest early warning in the whole report, and a total-only view completely hides it.
- Watch bucket migration. Compare this month to last: balances sliding one bucket to the right month after month mean collection is losing, no matter what the total does.
- Beware the growth illusion. Rising sales inflate the current bucket and make the overdue proportion look smaller. Read the overdue buckets in euros as well as percentages.
- Ask what "overdue" is measured from. Due date, not invoice date. An invoice with 60-day terms is not overdue at day 45, and a report that treats it as such generates noise that trains everyone to ignore the report.
Payables aging is read differently
The same buckets, opposite meaning. Overdue payables are not a risk to your asset — they are a decision you made, deliberately or not, and they carry consequences: statutory late-payment interest under EU Directive 2011/7/EU, supply held back, and credit terms withdrawn.
The useful reading is:
- Anything in the overdue buckets that you did not intend to be there is a process failure — an invoice stuck in approval, a missed payment run, a supplier whose bank details were never set up.
- A large current bucket close to due is your next payment run, and the number that should be compared against expected cash inflows before you commit to anything else.
Reading both agings side by side is what turns them into a short-term cash forecast: what is due in, what is due out, in the same weeks.
The provision link
The over-90 bucket is where the aging report stops being an operational tool and starts affecting the accounts. Under the accrual principle, a receivable that is unlikely to be collected should not sit on the balance sheet at full value — the standard treatment is a provision based on the aging profile (for example, a rising percentage per bucket), posted through adjusting entries at period end.
That provision is an estimate and reduces profit, but it does not remove the receivable or affect the VAT. Removing the debt entirely, and recovering the VAT, are separate steps with their own conditions — the subject of bad debt.
How Nordlet produces it
POST /v1/reports/debt-aging { side: 'receivables' | 'payables', asOf } returns exactly the table above: one row per partner with current, d1to30, d31to60, d61to90, over90 and total columns.
Two details worth knowing about how it is computed. Buckets are measured from the due date where one exists, falling back to the issue date (for receivables) or document date (for payables) where it doesn't — so setting payment terms on partners is what makes the report meaningful. And only open items are included: the report shows the remaining balance per document, so partially paid invoices appear at their unpaid amount rather than their full value.
The report is available in the app under Reports, and as a background export through POST /v1/reports/jobs/create when the data set is large enough to be worth generating asynchronously.
FAQ
What are standard aging buckets?
Current, 1–30, 31–60, 61–90 and over 90 days past due is the most common split, and the one Nordlet uses. Some companies use 30-day bands throughout or add a 120+ bucket; the exact boundaries matter less than measuring consistently from the due date.
Is aging measured from the invoice date or the due date?
From the due date — an invoice is not late until its terms have expired. Reports that age from the invoice date make every 60-day-term customer look delinquent and quickly become ignored.
What does an aging report tell you that a balance doesn't?
Concentration and risk. The same total balance can be a healthy book of current invoices or a collection failure that has already lost money, and only the distribution across buckets — plus the pattern per customer — distinguishes them.
How do aging buckets relate to bad debt provisions?
The aging profile is the standard basis for estimating a provision: older buckets get a higher expected loss percentage. The provision is an accounting estimate posted at period end; it does not write the debt off and does not by itself recover any VAT.
Should I run aging on receivables only?
No. Payables aging tells you what you owe and how much of it is already late — the direct input to a payment run and to any short-term cash forecast. Reading both together is what makes either useful.