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What is an Accounts Receivable Aging Report in the Construction Industry?

Updated: Apr 1

Do you ever feel like managing finances for your construction business is like trying to solve a Rubik's cube blindfolded? And when you add late payments to the mix, it's enough to give anyone a headache. Well, what if we told you there's a tool that can make your life easier and your cash flow healthier? Enter the accounts receivable aging report.

In this blog post, we're going to show you how this powerful tool can help you keep track of overdue invoices and chase up those late payments with ease. We'll explain what an accounts receivable aging report is and why it's so important for your business. Then we will give you some tips on how to use it strategically. So grab a coffee, sit back, and get ready to transform the way you manage your finances.

what is an aging report

What is An Aging Report?

Accounts receivable aging reports can be incredibly useful for companies to identify customers who are slow to pay. Depending on how long they have been overdue, unpaid client invoices are grouped in this report.

A/R aging reports can help estimate uncollectible receivables and improve collections. Businesses can also use this report to assess the financial health of their company as well as the reliability of their customers.

How Does an Accounts Receivable Aging Report Work?

An accounts receivable aging report works by categorizing outstanding invoices into age buckets. These buckets are typically 30, 60, 90, and 120+ days past due. The report provides a summary of the total amount owed for each age bucket as well as the total amount owed overall.

Businesses can use the report to identify overdue invoices and take appropriate action. For example, they can follow up with customers to request payment or negotiate payment plans. By using the report, businesses can improve their collection processes and reduce the risk of bad debt.

Example of an Accounts Receivable Aging Report

As a business owner, you know that keeping track of your accounts receivable (A/R) is crucial to maintaining a healthy cash flow. One tool that can help you with this is an account receivable aging report or aging schedule.

Accounts Receivable Aging




31-60 days

61-90 days

91+ days










Superior LLC







Acme Inc.














This report provides a breakdown of your unpaid invoices, so you can quickly see who owes you money and how long the invoices have been outstanding. It's a great way to identify which customers are behind on their payments and may need follow-up.

The aging report categorizes your invoices by date ranges, so you can quickly see which ones are overdue.

The categories include:

  • Current invoices that are not yet due

  • Invoices that are 1-30 days past due

  • Invoices that are 31-60 days past due

  • Invoices that are 61-90 days past due

  • Invoices that are 91-120 days past due

  • Invoices that are more than 120 days past the due date

By using an AR aging report, you can make informed decisions about offering adjusted payment terms to loyal customers or taking action to prevent doubtful debts.

Why Are Accounts Receivable Aging Reports Important?

aging reports

An A/R aging summary report has been used for years, obviously because of how useful it is for construction businesses' A/R management.

  • Spotting cash flow problems

By quickly identifying overdue invoices and taking action, you can improve cash flow and reduce the risk of running into bad debt.

  • Estimating bad debts

The report can help you estimate the amount of bad debt you're likely to incur and take steps to prevent it.

  • Adjusting credit policies

By analyzing the data in the report, you can adjust your credit policies to prevent late payments. You can also compare your credit risk to industry standards to see if you are taking on too much credit risk and need to make proper adjustments.

  • Improving collection procedures:

This report allows you to analyze how your collection processes are going, so you can identify any problem areas that need to be addressed. For example, it can be a warning that your collection procedures need to be changed if you see a lot of old accounts receivable amounts, particularly after 60 or 90 days.

How to Create an AR Aging Report

accounts receivable aging report

Creating an accounts receivable aging report is relatively easy. Here are the steps:

1. Gather unpaid invoices.

Collect all unpaid invoices from your customers, even if they only have a partial balance left.

2. Calculate days past due.

Calculate the number of days each invoice is past due. For instance, if an invoice was due on the 15th and it's now the 30th, the invoice is 15 days past due.

3. Categorize invoices.

Group each customer's invoices into the appropriate aging schedule category. For instance, you could have invoices that are current, 1-30 days past due, 31-60 days past due, and so on.

4. Create the report.

List all customers with open invoices and follow the same process for each of them as in step three. Once you've finished this step, add up the numbers to see how many of your bills are current, 1–30 days late, or more.

In addition to creating an accounts receivable aging report on your own, there are also bookkeeping service providers like CCA that can help. CCA specializes in providing bookkeeping services to construction businesses and can help you access your most current accounts receivable aging reports. With CCA's expertise, you can improve your AR turnover rates and maintain a healthy cash flow, allowing you to focus on growing your business.

The Best Ways to Use an AR Aging Report

Once you have created an accounts receivable aging report, there are several ways to use it effectively:

ar aging report

Follow up with customers:

Use the report to identify overdue invoices and follow up with customers to request payment or negotiate payment plans.

Improve your collection process:

Use the report to identify customers who may need follow-up and improve your collection process.

Forecast your cash flow:

Use the report to forecast your cash flow and identify potential problems.

Monitor your financial health:

Use the report to monitor your overall financial health and reduce the risk of cash flow problems.

Accounts Receivable Aging Report FAQs

Q: How often should I create an accounts receivable aging report?

A: It is recommended to create an accounts receivable aging report at least once a month. However, the frequency may depend on the size and complexity of your business.

Q: How do I know when an invoice is considered past due?

A: An invoice is considered past due when the due date has passed and payment has not been received.

Q: What should I do if an invoice is past due?

A: Follow up with the customer to request payment or negotiate payment plans. You may also want to consider sending a reminder letter or hiring a collection agency.

In Conclusion,

An accounts receivable aging report is an essential tool for construction businesses to manage their finances effectively. By creating and using this report, businesses can improve their collection process, forecast their cash flow, and reduce the risk of bad debt. Partnering with a bookkeeping service provider like CCA can make it even easier to access these reports and improve your financial management. With the right approach and support, any construction business can achieve financial success.

 accounts receivable services

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