Last updated: December 2025
An accounts receivable aging report shows you exactly where your money is stuck—and which invoices need urgent attention before they become uncollectable.
UK businesses are owed an average of £21,000 in late invoices. Without a clear view of what's overdue and for how long, you're flying blind on cash flow. This guide shows you how to create, read, and act on AR aging reports—plus a free template to get started.
Want to see your AR health at a glance? Try our free AR Health Calculator.
An accounts receivable aging report (also called an aged debtors report) categorises your unpaid invoices by how long they've been outstanding. Instead of seeing receivables as one lump sum, you see them broken into time buckets:
This simple breakdown transforms raw invoice data into actionable intelligence. At a glance, you can see which customers pay on time, which consistently pay late, and which accounts need immediate attention.
You can't manage what you can't see. AR aging reports show not just how much you're owed, but when that money is likely to arrive. If 30% of your receivables consistently age beyond 60 days, you can plan accordingly rather than being blindsided by cash shortages.
Here's the statistic that should worry every business owner: once an invoice hits 90 days overdue, you'll statistically only recover 70p on the pound. After six months, collection probability drops below 50%.
Collection Probability by Age
This is why the 61-90 day bucket is your "red zone." Invoices in this bracket need escalation—phone calls, payment plans, or formal demand letters—while there's still time to collect.
AR aging reports serve as an early warning system. When a previously reliable customer's invoices suddenly start aging, that's a red flag for potential financial distress. Early identification allows intervention before amounts become unrecoverable.
Download our free Excel template to start tracking your aged debtors today:
→ Download Free AR Aging Template (Excel)
The template includes:
List all outstanding invoices with:
For each invoice, calculate the number of days since the due date (or invoice date, depending on your preference). Be consistent—mixing methods creates confusion.
Sort each invoice into the appropriate bucket:
Group invoices by customer to see total exposure. A customer with multiple aging invoices presents higher risk than one late invoice.
Calculate total amounts in each bucket and percentages of total receivables. These summary statistics reveal your overall AR health at a glance.
If you're in construction, standard AR aging templates will mislead you.
Here's why: Construction contracts typically hold back 5-10% of each payment as retention until project completion (or 12 months after). This retention money isn't "overdue"—it's contractually held.
If you don't separate retentions from standard aging, your report will look artificially bad. £50,000 in legitimate retentions will show as "90+ days overdue" when it's actually not due yet.
Solution: Add a separate "Retention Held" column to your aging report. This shows:
Our free template includes this separation built in.
For more strategies specific to construction, see our guide on how to reduce DSO in UK construction.
Retentions often get "forgotten" after project completion. Set up a system to:
Concentration risk: If one customer represents more than 20% of your receivables, their late payment could cripple your cash flow.
Growing 90+ bucket: If your over-90-day receivables increase month over month, your collection process needs immediate attention.
Sudden aging from reliable customers: When a customer with a strong payment history suddenly has aging invoices, investigate immediately. It often signals financial distress.
Pattern recognition: Do certain industries, salespeople, or project types consistently show poor payment? The pattern reveals where to focus process improvements.
Healthy vs Unhealthy AR Distribution
If more than 15% of your receivables are over 60 days, you have a collection problem that needs addressing.
Not all overdue invoices deserve equal attention. Use aging data to prioritise:
The Late Payment of Commercial Debts (Interest) Act 1998 gives you powerful tools to recover late B2B payments. Consider adding an "Accrued Interest" column to your aging report—seeing this potential revenue motivates faster chasing.
You can legally charge 8% above Bank of England base rate on late commercial debts. As of December 2025, that's approximately 13% annual interest.
You can also claim fixed compensation:
Pro tip: Include these rights in your payment terms. Even if you don't charge interest, referencing statutory rights in collection letters often accelerates payment.
Small invoices accumulate. Ten £500 invoices at 90+ days is £5,000 you're unlikely to recover. Track everything.
Some businesses age from invoice date, others from due date. Either works, but mixing methods makes reports meaningless. Pick one and stick to it.
Beautiful reports that sit unread are worthless. Establish clear responsibilities: who reviews the report, how often, and what actions trigger at each aging threshold.
Disputed invoices shouldn't be treated the same as simply unpaid invoices. Add a "Dispute Status" column to avoid chasing customers for amounts they've legitimately queried.
Manual spreadsheets work for very small businesses, but they're error-prone and time-consuming. As invoice volumes grow, manual tracking becomes a "paper-heavy nightmare."
Modern AR automation platforms like Equisettle integrate with Xero, QuickBooks, and FreeAgent to:
The result: real-time visibility without manual data entry, and collection workflows that run themselves. See how Wulfjoy automated their AR process.
Compare your options in our guide to the best AR software for UK businesses.
DSO stands for Days Sales Outstanding—the average number of days it takes to collect payment after invoicing. Calculate it as: (Accounts Receivable ÷ Total Credit Sales) × Number of Days. A lower DSO means faster collections. UK construction companies average 83 days; top performers achieve 45-60 days. Learn more in our guide to reducing DSO in construction.
Weekly reviews catch issues early. Collection teams might review daily for work prioritisation, while management reviews weekly summaries. Monthly trending analysis shows whether collection performance is improving or declining.
They're the same thing. "Accounts receivable aging report" is the American term; "aged debtors report" is more common in the UK. Both categorise unpaid invoices by how long they've been outstanding.
Aim for less than 5% of total receivables in the 90+ day bucket. If you're above 10%, you have a serious collection problem. Above 15% threatens business viability.
Either method works—the key is consistency. Aging from due date is more intuitive (0 days = just became overdue), while aging from invoice date accounts for different payment terms across customers. Most businesses age from due date.
AR aging reports transform reactive "chasing invoices when you need cash" into proactive credit management. The key insights:
Start with our free template, review weekly, and take action on what the data shows.
Equisettle integrates with your accounting software to generate live AR aging reports automatically. See which invoices are at risk of going overdue—before they do—and automate collection workflows based on aging thresholds.
See how Wulfjoy transformed their collections, then try it yourself:
