What is Aging Schedule?

Aging Schedule

The aging schedule is a summarized list of accounts receivable broken down into different time periods that rank the receivables depending on days until due or past due. The aging schedule is generally divided into 30 days’ categories so that the current items are listed in the 0–30 days’ category, moderately overdue items are listed in the 31–60 days’ category and very overdue are listed in other categories.


CustomerTotal DueCurrent due (under 30 Days)1-30 days past due31-60 days past due61-90 days past dueMore than 90 days
Company ABC100,00080,00020,000   
Company XYZ70,000  30,00030,00010,000
Company AXY25,00020,000 5000  

Aging Schedule Uses

The aging schedule method of monitoring credit policy is more advantageous than its counterpart known as the average collection period.

Following are the uses of aging schedule method −

To Initiate the Collection Process for Overdue Payments

The aging schedule or more commonly the receivables aging schedule is used to determine when to initiate the collection process for overdue payments from the borrowers.

It also shows when to write off a debt as it has turned into bad debt and also when to send the report to a collection agency to collect the overdue bills from the customers.

Used to Determine the Total Amount of Bad Debt

The aging schedule may also be used to determine the total amount of bad debt the company has incurred which helps the company to determine the most appropriate amount for the doubtful accounts.

To Determine the Amount of Credit to Offer

Another use of an aging schedule report is for the credit department to determine whether a particular individual should be offered more or fewer amounts of credit.

Help Lenders Build Their Credit Policy

By maintaining an aging schedule, lenders can easily determine which of their customers are paying the dues back in time and which are unable to pay the dues back. So, this may help the lenders build their credit policy.

In long term, the impact of past due accounts receivables on the cash flow of the lending firm can also be determined using an aging schedule report.

Used to Check the Cash Flow

The aging schedule can also be used to check the cash flow of a company. In the case there is a negative cash flow, it must be addressed as soon as possible and the negative cash flow can be found in the aging schedule table.

To Look for Specific Information

The aging schedule makes it easy to find the auditors to look for specific information from the table.

For example, if a firm has been shown in past-due accounts multiple times, the lender must reevaluate whether to continue doing business with the former.

To Determine Percentage of Uncollected Accounts Receivables

The aging schedule table can also be used to determine the percentage of uncollected accounts receivables which can then be re-assessed by the lender firm to let the collection agency collect as much debt as possible.

By understanding the percentage of bad debt, a lender firm must act to collect the uncollected amount of bad debt as soon as possible so that the problem can be handled before it goes out of control. No lender can cursive if a larger chunk of its portfolio is constantly in the bad debts category. That is why the aging schedule is so important.


The aging schedule method also has some shortcomings.

For example, the technique uses aggregated data from time periods. Therefore, the aging schedule method is not fully free from drawbacks.

However, in comparison to the average collection period method that only provides a tentative measure of the probable duration of dues unpaid, the aging schedule method is more sophisticated. Businesses must, therefore, keep records of the dues they will have to seek from their customers in accordance with the dates of dues outstanding.