Accounts Receivable Aging

The Accounts Receivable Aging report shows outstanding invoices owed by customers, categorized by how long they've been unpaid. This helps you manage collections and maintain healthy cash flow.

What is Accounts Receivable Aging?

Shows:

• Outstanding invoices - All unpaid customer invoices
• Customer breakdown - Amount owed by each customer
• Aging categories - How long invoices are overdue
• Total receivables - Total amount owed to your business
• Collection priority - Which customers to follow up with

Purpose:

• Improve cash flow management
• Prioritize collection efforts
• Identify slow-paying customers
• Reduce bad debts
• Monitor credit risk

[SCREENSHOT: Sample Accounts Receivable Aging report]

Generating the Report

1. Navigate to https://accounting.digit-tally.io/reports/accounts-receivable-aging
2. Click Reports > Accounts Receivable Aging
3. Select As of Date (e.g., "Jan 31, 2026")
4. Click Generate Report

[SCREENSHOT: Generate AR Aging dialog]

Understanding Aging Categories

Aging Buckets

Category	Description	Risk Level
Current	Due within 30 days	✅ Low risk
1-30 Days	1-30 days overdue	⚠️ Monitor
31-60 Days	31-60 days overdue	⚠️ Follow up
61-90 Days	61-90 days overdue	🔴 High risk
90+ Days	Over 90 days overdue	🔴 Very high risk

Example Report:

Customer	Current	1-30 Days	31-60 Days	61-90 Days	90+ Days	Total
ABC Ltd	NGN 500,000	NGN 200,000	NGN 0	NGN 0	NGN 0	NGN 700,000
XYZ Trading	NGN 300,000	NGN 0	NGN 150,000	NGN 0	NGN 0	NGN 450,000
Tech Solutions	NGN 0	NGN 100,000	NGN 0	NGN 200,000	NGN 0	NGN 300,000
Fast Foods	NGN 0	NGN 0	NGN 0	NGN 0	NGN 250,000	NGN 250,000
Others	NGN 450,000	NGN 150,000	NGN 100,000	NGN 0	NGN 50,000	NGN 750,000
Total	NGN 1,250,000	NGN 450,000	NGN 250,000	NGN 200,000	NGN 300,000	NGN 2,450,000

[SCREENSHOT: Complete AR Aging report with aging buckets]

Customer-Wise Breakdown

Detailed View

Click on any customer to see invoice-level details:

ABC Ltd - Outstanding Invoices:

Invoice #	Date	Due Date	Days Overdue	Amount	Status
INV-2026-001	Jan 15	Feb 14	Current	NGN 500,000	Due Soon
INV-2025-245	Dec 20	Jan 19	12 days	NGN 200,000	Overdue

Total Owed by ABC Ltd: NGN 700,000

[SCREENSHOT: Customer drill-down with invoice details]

Contact Information

Each customer row shows:

• Customer name
• Phone number
• Email address
• Last payment date
• Click Send Reminder to email customer

[SCREENSHOT: Customer contact and reminder options]

Aging Analysis

Key Metrics

Total Accounts Receivable:

Total AR = Sum of all outstanding invoices
         = NGN 2,450,000

Aging Percentages:

Current (0-30 days):     NGN 1,250,000 / NGN 2,450,000 = 51%
1-30 Days Overdue:       NGN 450,000 / NGN 2,450,000 = 18%
31-60 Days Overdue:      NGN 250,000 / NGN 2,450,000 = 10%
61-90 Days Overdue:      NGN 200,000 / NGN 2,450,000 = 8%
90+ Days Overdue:        NGN 300,000 / NGN 2,450,000 = 13%

Healthy AR Distribution:

• ✅ 80%+ in Current category
• ✅ Less than 10% over 60 days
• ✅ Minimal 90+ days overdue

Warning Signs:

• ⚠️ Large amounts in 60+ days category
• ⚠️ Growing 90+ days balance
• ⚠️ Same customers appearing in older buckets

[SCREENSHOT: AR Aging with percentage distribution chart]

Days Sales Outstanding (DSO)

Formula:

DSO = (Accounts Receivable / Total Credit Sales) × Number of Days

Example:
If Total AR = NGN 2,450,000
Monthly Credit Sales = NGN 5,000,000

DSO = (2,450,000 / 5,000,000) × 30 = 14.7 days

What Good DSO Looks Like:

• ✅ 30 days or less - Excellent
• ⚠️ 31-45 days - Monitor
• 🔴 45+ days - Poor collection

[SCREENSHOT: DSO calculation and trend graph]

Using Report for Collections

Priority Action Plan

Step 1: Immediate Action (90+ Days)

• 🔴 Priority: HIGH
• Call customers personally
• Send formal demand letter
• Consider legal action
• Put account on hold (no new sales)

Step 2: Follow Up (61-90 Days)

• ⚠️ Priority: MEDIUM-HIGH
• Send 2nd reminder email
• Phone call follow-up
• Negotiate payment plan
• Apply late fees if applicable

Step 3: Reminder (31-60 Days)

• ⚠️ Priority: MEDIUM
• Send reminder email
• Friendly phone call
• Verify invoice received
• Confirm payment date

Step 4: Monitor (1-30 Days)

• ✅ Priority: LOW
• Send friendly reminder
• Maintain relationship
• Check if invoice approved

Step 5: Track Current

• ✅ Priority: PREVENTIVE
• Ensure invoices delivered
• Confirm receipt
• Set up payment reminders

[SCREENSHOT: Collection action dashboard with priority flags]

Collection Templates

Email Templates Available:

1. Friendly Reminder (1-30 days)

   Subject: Payment Reminder - Invoice [INV-XXX]
   
   Hi [Customer Name],
   
   This is a friendly reminder that Invoice [INV-XXX] for
   NGN [Amount] was due on [Due Date] and is now [X] days overdue.
   
   If you've already sent payment, please disregard this message.
   Otherwise, we'd appreciate payment at your earliest convenience.

2. Urgent Follow-Up (31-60 days)

   Subject: URGENT: Overdue Invoice [INV-XXX]
   
   Dear [Customer Name],
   
   Invoice [INV-XXX] for NGN [Amount] is now [X] days overdue.
   Please arrange payment immediately to avoid service disruption.

3. Final Notice (90+ days)

   Subject: FINAL NOTICE - Invoice [INV-XXX]
   
   Dear [Customer Name],
   
   This is our final notice regarding Invoice [INV-XXX] for
   NGN [Amount], which is [X] days overdue.
   
   If payment is not received within 7 days, we will be forced
   to take legal action and report to credit bureaus.

[SCREENSHOT: Send reminder email dialog with templates]

Collection Best Practices

Prevention Strategies

Before Invoicing:

1. ✅ Check customer credit history
2. ✅ Set credit limits
3. ✅ Get advance payment for new customers
4. ✅ Require deposits for large orders
5. ✅ Clear payment terms in contract

At Invoicing:

1. ✅ Send invoice immediately after delivery
2. ✅ Clear payment terms (e.g., "Net 30")
3. ✅ Multiple payment options (bank transfer, card)
4. ✅ Include contact info for queries
5. ✅ Professional invoice format

After Invoicing:

1. ✅ Confirm invoice received
2. ✅ Send reminder 1 week before due date
3. ✅ Follow up on due date
4. ✅ Escalate for late payments
5. ✅ Track collection metrics

Payment Terms

Common Terms in Nigeria:

Term	Meaning	Days
Net 7	Payment due in 7 days	7
Net 15	Payment due in 15 days	15
Net 30	Payment due in 30 days	30
Net 45	Payment due in 45 days	45
COD	Cash on delivery	0
CIA	Cash in advance	-1
2/10 Net 30	2% discount if paid in 10 days, else net 30	10-30

Recommended for Small Business: Net 15 or Net 30

[SCREENSHOT: Payment terms settings]

Filters and Sorting

Filter Options

By Customer:

• Specific customer
• Customer group
• All customers

By Amount:

• Over NGN 100,000
• Over NGN 500,000
• Custom amount

By Aging:

• Current only
• Overdue only
• 90+ days only

By Risk:

• High risk customers
• Repeat late payers
• Good payment history

[SCREENSHOT: Filter and sort options]

Sorting Options

Sort by:

• Total amount (highest first)
• Days overdue (oldest first)
• Customer name (A-Z)
• Last payment date
• Risk score

[SCREENSHOT: Sorted AR report by total amount]

Export Options

Export Formats

PDF:

• Professional format
• Send to management
• Attach to reports
• Print and file

Excel:

• Detailed analysis
• Pivot tables
• Custom calculations
• Further filtering

CSV:

• Import to other systems
• Data backup
• Accounting software integration

[SCREENSHOT: Export AR Aging dialog with format options]

Scheduled Reports

Set up automatic reports:

1. Go to Report Settings
2. Select Schedule Report
3. Choose frequency:
   • Daily
   • Weekly (recommended)
   • Monthly
   • First of month
4. Add email recipients
5. Select format (PDF or Excel)

Example Schedule:

Report: Accounts Receivable Aging
Frequency: Every Monday at 9:00 AM
Recipients: finance@yourcompany.com, ceo@yourcompany.com
Format: PDF + Excel

[SCREENSHOT: Schedule report settings]

Integration with Collections

Automatic Reminders

Setup Automatic Reminders:

1. Go to Settings > Collections

2. Enable Auto-Reminders

3. Configure reminder schedule:

   • 7 days before due date
   • On due date
   • 7 days after due date
   • 30 days after due date
   • 60 days after due date

4. Customize email templates

5. Set escalation rules

[SCREENSHOT: Automatic reminder configuration]

Payment Plans

For customers with large overdue amounts:

1. Click customer in AR report
2. Select Negotiate Payment Plan
3. Enter plan details:
   • Total amount owed
   • Down payment
   • Monthly installments
   • Number of payments
   • Interest (if applicable)

Example:

Customer: Tech Solutions
Total Owed: NGN 300,000
Payment Plan:
  Down Payment:      NGN 50,000 (Due: Feb 1)
  Monthly Payment:   NGN 50,000
  Duration:          5 months
  Final Payment:     NGN 50,000 (Due: Jun 1)

[SCREENSHOT: Payment plan setup form]

Reporting to Management

Executive Summary

Key Metrics Dashboard:

Total Accounts Receivable:     NGN 2,450,000
Current (Healthy):             NGN 1,250,000 (51%)
Overdue (1-30 days):           NGN 450,000 (18%)
At Risk (31-60 days):          NGN 250,000 (10%)
High Risk (61-90 days):        NGN 200,000 (8%)
Critical (90+ days):           NGN 300,000 (13%)

Days Sales Outstanding (DSO):  14.7 days
Average Collection Period:     22 days
Collection Efficiency:         88%

[SCREENSHOT: Executive AR dashboard with charts]

Trend Analysis

Month-over-Month Comparison:

• Compare current AR vs previous months
• Track collection improvements
• Identify seasonal patterns
• Monitor DSO trends

Example:

Month       Total AR      DSO    90+ Days
January     NGN 2,450,000  14.7   NGN 300,000
December    NGN 2,800,000  18.5   NGN 450,000
November    NGN 2,600,000  16.2   NGN 400,000

Trend: ↗️ Improving (AR decreasing, DSO improving)

[SCREENSHOT: AR trend graph over 12 months]

What's Next?

• Profit & Loss - View overall business performance
• Trial Balance - Review all account balances
• Reports Overview - All available reports

Weekly Review

Review your Accounts Receivable Aging report every Monday morning. This weekly habit helps you stay on top of collections, maintain healthy cash flow, and identify problem accounts before they become critical.

Bad Debt Prevention

Any invoice over 90 days has a higher risk of becoming uncollectible. Act immediately on 90+ day accounts - call the customer, negotiate payment plans, or consider writing off as bad debt if recovery is unlikely.