Accounts Receivable Aging

An accounts receivable (AR) aging report is a snapshot of all the money your customers owe you, organized by how long each invoice has been outstanding. It's usually broken into columns: Current (not yet due), 1-30 days past due, 31-60 days, 61-90 days, and 90+ days. Each column shows the total dollar amount sitting in that aging bucket.

The report serves two critical purposes. First, it tells you exactly where your money is stuck. If $120,000 of your $150,000 in receivables is over 60 days old, you have a serious collection problem. Second, it helps you prioritize your collection efforts — the older a receivable gets, the less likely you are to collect it. Industry data shows that invoices over 90 days past due have roughly a 50% chance of being collected; over 120 days, it drops to around 25%.

For contractors, AR aging is especially important because of the way construction payments work. Between progress billing cycles, retainage holds, and the "pay-when-paid" clauses common in subcontracts, receivables can age quickly. A healthy contracting business keeps the majority of its AR in the current-to-30-day column.

Cash flow kills more contracting businesses than lack of work. You can be profitable on paper — with a full project pipeline and solid margins — but go under because your receivables are aging and you can't cover payroll, materials, and insurance premiums. The AR aging report is your early warning system.

Review it weekly. When invoices start sliding into the 31-60 day column, pick up the phone. When they hit 61-90 days, escalate — send a formal demand, withhold future work, or start the lien process. The contractors who survive are the ones who treat collections as seriously as they treat project management.