Aging Schedule
An aging schedule is a financial report that categorizes a company’s accounts receivable or accounts payable according to the length of time they have been outstanding. The primary purpose of an aging schedule is to determine the credit quality and potential collectability of receivables or the urgency and priority of payables. This report assists companies in managing their cash flow, identifying problematic customers or vendors, and taking appropriate collection or payment actions.
The aging schedule typically organizes outstanding balances into time buckets or periods, such as:
- Current (not yet due)
- 1-30 days past due
- 31-60 days past due
- 61-90 days past due
- Over 90 days past due
By grouping the outstanding balances into these categories, a company can quickly assess the overall health of its receivables or payables and prioritize actions to improve cash flow and financial stability.
Example of an Aging Schedule
Here’s an example of an aging schedule for a company’s accounts receivable:
Company XYZ – Accounts Receivable Aging Schedule (as of March 31, 2023)
| Customer | Current | 1-30 Days | 31-60 Days | 61-90 Days | Over 90 Days | Total |
|---|---|---|---|---|---|---|
| ABC Corporation | $1,000 | $500 | $0 | $0 | $0 | $1,500 |
| DEF Industries | $0 | $3,000 | $2,000 | $0 | $0 | $5,000 |
| GHI Enterprises | $5,000 | $0 | $1,000 | $0 | $0 | $6,000 |
| JKL Limited | $0 | $0 | $0 | $1,500 | $0 | $1,500 |
| MNO Inc. | $0 | $0 | $0 | $0 | $2,000 | $2,000 |
|---|---|---|---|---|---|---|
| Total | $6,000 | $3,500 | $3,000 | $1,500 | $2,000 | $16,000 |
In this example, the aging schedule shows the outstanding balances of the company’s accounts receivable for different customers and groups them into time periods based on how long the balances have been outstanding. Company XYZ can use this report to identify potential collection issues, prioritize collection efforts, and make decisions about extending credit to customers in the future.
