On the balance sheet, "trade receivables" is a single number, and it usually feels reassuring: the sales are made, the money is on its way. But inside that number, an invoice due tomorrow and a balance that has gone uncollected for two years carry exactly the same weight. A receivables aging report slices that figure by time and shows which receivables are healthy and which are at risk. In this article we explain how the report is built, how to read it, and how your collections team can turn it into a work list.
What is receivables aging?
Aging means grouping open receivables by how much time has passed since they fell due. The typical buckets are: not yet due, 1-30 days overdue, 31-60 days, 61-90 days, and more than 90 days. Some companies extend this with 120-day and 180-day buckets.
There is a subtle but important distinction here: is the aging based on the invoice date or the due date? Aging by invoice date unfairly makes customers on long payment terms look risky. What matters for management is the time elapsed after the due date.
Matching payments: the heart of the report
The accuracy of an aging report depends on which invoices each incoming payment closes. The common approach is first in, first out: an incoming payment closes the oldest open invoice first. But if the customer says they paid a specific invoice, or your ERP closes items invoice by invoice, the report should reflect that too.
If the matching is wrong, the report misleads you in one of two directions: it shows the old debt as closed and the new debt as overdue, or the other way around. That is why it is a good habit to compare the report against the statements of a few large customers before you start relying on it.
How to read the report
Picture a simple table with sample figures:
| Customer | Not yet due | 1-30 days | 31-60 days | 61-90 days | 90+ days |
|---|---|---|---|---|---|
| A | 400,000 | 50,000 | 0 | 0 | 0 |
| B | 120,000 | 90,000 | 80,000 | 60,000 | 0 |
| C | 0 | 0 | 0 | 15,000 | 45,000 |
(Sample figures, in TRY.)
- A is large but healthy: nearly all of the balance is not yet due.
- B needs attention: the balance is spread across every bucket, which means payments are falling behind invoices. This is often an early sign of a cash squeeze.
- C is small but problematic: the entire balance sits in the old buckets. This is where legal action or a restructuring conversation may come up.
The essence of reading the report is this: don't look at the total of a single row, look at how the balance is distributed across the buckets. And compare it with last month's report. If a customer's balance is drifting to the right, toward the older buckets, that is where the warning sign is.
From report to work list
An aging report only creates value once it lands in someone's hands as a work list. A practical setup:
- 1-30 days: a friendly reminder, a copy of the invoice and payment details
- 31-60 days: a phone call together with the sales rep, and a committed payment date
- 61-90 days: new shipments require approval, and a manager-level conversation
- 90+ days: evaluate restructuring or legal action
What matters here is assigning each action to a person. If collections are treated as accounting's job alone, the sales team keeps shipping to the late-paying customer. When sales reps see the report for their own customers on a regular basis, a delay is often resolved with a single phone call. These thresholds vary by industry. In sectors that work on long payment terms, such as wholesale and B2B distribution, the buckets can be wider.
From aging to DSO
An aging report is a snapshot. To see the trend, you look at days sales outstanding (DSO). The simple formula is:
DSO = (average trade receivables / credit sales in the period) × number of days in the period
With sample figures: if credit sales in a quarter (90 days) are TRY 9,000,000 and average receivables are TRY 3,000,000, then DSO = (3,000,000 / 9,000,000) × 90 = 30 days. A DSO that climbs over the months is the summary indicator of balances drifting to the right in the aging table. We covered the effect of DSO on cash in detail in our article on the cash conversion cycle.
Checklist
- Is aging based on the due date?
- Is the payment-matching method defined, and is it consistent with how items are closed in the ERP?
- Are outstanding checks and promissory notes tracked separately?
- Is the report run at least monthly, preferably weekly?
- Is it compared with the previous period?
- Is there a named owner and a defined action for each bucket?
How we do it at Globya
For companies using the common ERP and finance platforms on the market, led by Netsis and Logo, the ERP systems widely used in Türkiye, READERP comes with a ready-made Receivables module: it connects to the ERP read-only, never writes a single row, and is set up the same day. You can ask questions such as "Which customers have had balances over 60 days in the last three months?" in plain language (READERP is built for questions in Turkish). There is also a Confirmation module for verifying account statements with the other party; we explain that topic in our article on current account reconciliation.
Frequently asked questions
How often should an aging report be run?
Weekly for the collections team and monthly for management is a good rhythm. The real value comes from comparing the reports with one another over time.
Do receivables that are not yet due count as a risk?
They are not a delay as such, but if they are concentrated in a single customer they carry concentration risk. If a large share of total receivables sits with a handful of customers, that should be monitored separately.
Is a receivable older than 90 days a doubtful receivable?
Not always. Turkish tax rules require conditions such as a lawsuit or enforcement proceedings before a receivable can be treated as doubtful, and that assessment should be made with your accountant. The aging report only shows you which receivables deserve that closer look.
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