Aging Schedule

AAA

DEFINITION of 'Aging Schedule'

An accounting table that shows the relationship between a company’s bills and invoices and its due dates. Often created by accounting software, aging schedules can be produced for both accounts payable and accounts receivable to help a company see whether it is current on its payments to others and whether its customers are paying it on time. 

INVESTOPEDIA EXPLAINS 'Aging Schedule'


An aging schedule often categorizes accounts as current (under 30 days), 1-30 days past due, 30-60 days past due, 60-90 days past due, and more than 90 days past due. Companies can use aging schedules to see which bills it is overdue on paying and which customers it needs to send payment reminders to or, if they are too far behind, send to collections. A company wants as many of its accounts to be as current as possible. A company may be in trouble if it has a significant number of past-due accounts.
 
Aging schedules can help companies predict their cash flow by classifying pending liabilities by due date from earliest to latest and by classifying anticipated income by the number of days since invoices were sent out. Besides their internal uses, aging schedules may also be used by creditors in evaluating whether to lend a company money. In addition, auditors may use aging schedules in evaluating the value of a firm’s receivables.
 
If the same customers repeatedly show up as past due in an accounts receivable aging schedule, the company may need to re-evaluate whether to continue doing business with them. An accounts receivable aging schedule can also be used to estimate the dollar amount or percentage of receivables that are probably uncollectible.
RELATED TERMS
  1. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts ...
  2. Accounts Receivable Subsidiary ...

    An accounting ledger that shows the transaction and payment history ...
  3. Liability Ledger

    The central file that contains a comprehensive list of all of ...
  4. Liability Management

    Use and management of liabilities, such as customer deposits, ...
  5. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to ...
Related Articles
  1. Investing Basics

    Reading The Balance Sheet

    Learn about the components of the statement of financial position and how they relate to each other.
  2. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  3. Personal Finance

    Breaking Down The Balance Sheet

    Knowing what the company's financial statements mean will help you to analyze your investments.
  4. Markets

    A Look At Corporate Profit Margins

    Take a deeper look at a company's profitability with the help of profit margin ratios.
  5. Investing Basics

    Understanding The Cash Conversion Cycle

    Find out how a simple calculation can help you uncover the most efficient companies.
  6. Entrepreneurship

    Small Business: Speed Up Receivables To Avoid A Cash Crunch

    Waiting for customers to pay can be a losing game. Look to factoring for quicker cash.
  7. Options & Futures

    Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  8. Investing Basics

    How To Evaluate A Company's Balance Sheet

    Asset performance shows how what a company owes and owns affects its investment quality.
  9. Markets

    Company Survival: Cash Conversion Cycle Is Key

    Find out how to use this figure to analyze a firm's financial condition.
  10. Investing

    What happens if a company doesn't think it will collect on some of its receivables?

    The accounts receivable account, or receivables for short, is created when a company extends credit to a customer based on a sale. However, there are times when a company will not collect on ...

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center