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Aging buckets are a staple of accounts receivable reporting—but they’re often calculated in a way that makes them far less useful than they appear. Many systems age invoices based on when they were sent, not when they are due. On paper, that sounds harmless. In practice, it can completely distort your understanding of cash-flow health.
When “90 days” doesn’t mean the same thing for everyone
Most businesses don’t operate on a single, uniform payment schedule. One customer might reliably pay on a 90-day schedule; another might be in trouble if they’re more than 30 days past due. If your aging buckets measure the time since invoice date rather than due date, both of these customers could show up in the same “90 days” bucket—even though one represents perfectly normal behavior and the other signals a major collections issue.
This blending of healthy and unhealthy receivables makes it impossible to see what’s actually going on.
You don’t just want outstanding invoices: you want insight
If your only goal were to know how much money is still owed, you could simply total the open invoices. But that number alone doesn’t answer the questions that actually matter:
- How healthy is our cash pipeline?
- What’s likely to be collected, and when?
- Where do we have real risk?
Aging buckets are meant to help answer those questions. To do that, they must be based on due dates, not sent dates. Once you anchor aging to due dates, you can separate “healthy” invoices (not overdue) from “unhealthy” ones (overdue, and increasingly so). That distinction is what lets you evaluate collections performance, understand short-term cash expectations, and identify at-risk customers.
The Next Step: Predictability, Not Just Buckets
The most valuable view of receivables goes beyond simple aging buckets. It combines:
- Amounts due by actual due date, and
- Expected payment timing based on customer history
This blend helps answer the big question: What are we realistically going to collect, and when? With that visibility, cash-flow planning becomes far more accurate and less reactive.
If you’d like a quick diagnosis of your accounts receivable health—or want help setting up reporting that actually reflects reality—schedule an appointment with us! We’d be happy to take a look at your data and answer any questions you have.
