Accounts Receivable Ageing Report: How to Read and Act
What an accounts receivable ageing report shows, how to read each bucket, a worked example with DSO, and what to do at 30, 60 and 90 days overdue.
Short answer: an accounts receivable ageing report lists what each customer owes you, split by how long each invoice has been overdue: not yet due, 1–30 days, 31–60, 61–90, 91–120 and over 120. It tells you who to chase first and whether collections are getting better or worse. Read it every week, act on the older buckets first, and watch the share of money more than 60 days overdue.
KEY TAKEAWAYS
- Age invoices from the due date, not the invoice date, or every invoice looks late.
- The older the bucket, the lower the chance of collecting; act on 60+ days first.
- Track the share over 60 days and your days sales outstanding (DSO) month on month.
- Each bucket has its own action: reminder, call, escalation, then a decision.
What the report shows
Each row is a customer and each column a time bucket. The total of the row is what that customer owes. The total of each column shows how much of your money is at that age. Most reports age from the due date; an invoice dated 1 October with 30-day terms is "current" until 31 October and enters the 1–30 bucket on 1 November.
A worked example
An IT services firm has ₹8,40,000 outstanding on 31 October.
| Bucket | Amount (₹) | Share |
|---|---|---|
| Current (not yet due) | 3,20,000 | 38% |
| 1–30 days overdue | 2,10,000 | 25% |
| 31–60 days | 1,40,000 | 17% |
| 61–90 days | 90,000 | 11% |
| 91–120 days | 50,000 | 6% |
| Over 120 days | 30,000 | 4% |
| Total | 8,40,000 | 100% |
₹1,70,000, about 20% of receivables, is more than 60 days overdue. That is the number to bring down. If the firm's credit sales for the last 90 days were ₹21,00,000, its days sales outstanding is 8,40,000 ÷ 21,00,000 × 90 = 36 days. On 30-day terms, that means customers pay about a week late on average, but the tail is what hurts.
What to do in each bucket
| Bucket | Action |
|---|---|
| Due in 7 days | A friendly reminder with the invoice and a payment link |
| 1–30 days | A second reminder, then a call to the person who approves payments |
| 31–60 days | Call the owner or finance head; agree a date; pause new work if needed |
| 61–90 days | Written escalation; stop credit; offer instalments for a genuine cash problem |
| Over 90 days | A formal notice; decide whether to pursue, settle or write off with your CA |
For the wording at each stage, see chasing overdue invoices without damaging the relationship. If you are a registered micro or small enterprise selling to a business, the 45-day MSME payment rule may also help.
Reading the report well
- Look at the trend, not one week. Compare the 60+ share and DSO with last month.
- Look for concentration. One customer owning half of the 90+ bucket is a credit decision, not a collections task.
- Check disputes. Old invoices are often disputed ones. Resolve the dispute and the payment usually follows.
- Clean up unapplied payments. A payment received but not matched to an invoice makes the report look worse than it is.
How Grovia handles it
Grovia's ageing report shows receivables and payables by customer and vendor in Current, 1–30, 31–60, 61–90, 91–120 and 120+ day buckets, built from your invoices, purchases and the payments recorded against them. Invoices carry a pay link through your own Razorpay, and email reminders can be switched on to go out before and after the due date.
Grovia runs invoices, payments and the ageing report alongside leads, quotations, GST invoices, payments and your team in one place. Start a free 14-day trial (no card needed).
Checked on 3 November 2026. Tax rules change; confirm anything that affects a return with your CA.
Frequently Asked Questions
What is an accounts receivable ageing report?
A report of what each customer owes, split into time buckets by how long each invoice has been overdue, such as current, 1–30, 31–60, 61–90 and over 90 days.
Should ageing be calculated from the invoice date or the due date?
From the due date, for collections. Ageing from the invoice date makes every invoice look overdue on the day it is raised.
How is days sales outstanding calculated?
Divide the receivables outstanding by credit sales for a period and multiply by the number of days in that period. ₹8.4 lakh outstanding against ₹21 lakh of credit sales in 90 days gives 36 days.
What is a healthy ageing profile?
Most of the money should be current or under 30 days overdue, with only a small share past 60 days. Compare your own trend month on month rather than a universal figure.
When should an overdue invoice be written off?
When recovery is unlikely and the cost of pursuing it is more than it is worth. Decide with your CA, because the accounting and tax treatment needs evidence of the attempts to collect.
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