Reading an AR aging like an examiner
An accounts receivable aging is the report a factor funds against every week. Read it for what has moved, what doesn't belong, and whether it ties to anything else, not just for how much sits over 90 days.
On Business Audits · October 7, 2026 · 5 min read
The AR aging is the most useful page a factor gets from a client, and the easiest to read badly. Most people scan the buckets from left to right and relax when the over-90 column looks small. An examiner reads it differently: customer by customer, against last month’s aging, against the general ledger, and against the bank.
| Customer | Current | 1–30 | 31–60 | 61–90 | Over 90 | Balance |
|---|---|---|---|---|---|---|
| Big River Grocers | 58,400 | 21,300 | – | – | – | 79,700 |
| Cedar Point Markets | 24,750 | 9,800 | 6,200 | – | – | 40,750 |
| Harbor Street Deli Supply | – | – | 4,150 | 3,900 | 11,450 | 19,500 |
| Prairie Fresh Co-op | 31,200 | (2,600) | – | – | – | 28,600 |
| Summit Natural Foods | 17,900 | 5,200 | – | – | – | 23,100 |
| Total by bucket | 132,250 | 33,700 | 10,350 | 3,900 | 11,450 | 191,650 |
| Less unapplied cash (Cedar Point) | (3,500) | |||||
| Aging total | 188,150 | |||||
| AR control account, general ledger | 189,900 |
Redwood Valley Foods Inc., AR aging at month end, past due by due date, in dollars. An illustrative aging for a fictional client.
Follow each customer across the buckets
A balance in 1–30 this month should have been current last month, and should be paid or in 31–60 next month. Put two agings side by side and follow each customer.
Cedar Point is paying its newer invoices while $6,200 sits in 31–60. That is usually a dispute or a short payment nobody has reported. Harbor Street is worse. Most of its balance is over 90 days, and something is still being added in the younger buckets, so the client keeps shipping to a customer that has stopped paying.
Know what the buckets are measured from
An aging can be run by invoice date or by due date. On 30-day terms, an aging by invoice date always shows a balance in 1–30, and nothing is wrong. An aging by due date shows the same balance as current, and anything in 1–30 is genuinely past due.
Neither is wrong, but they read very differently, and a client can switch from one to the other between reports. The basis is usually printed in the header. If it isn’t, ask, and ask for it to stay fixed.
Check the run date too. An aging printed on the third with two days of collections posted looks better than one run at the close of the month.
Credits in prior and unapplied cash
Look for credits sitting in past-due buckets: the $2,600 credit against Prairie Fresh in 1–30. A credit in prior often means a credit memo or a payment applied to the wrong invoice. It can also mean an old invoice was written off against a new one without anyone telling the factor. Either way, the gross past-due figure is understated by the credit, and eligibility should be worked out before credits are netted against it.
Unapplied cash is money received but not matched to invoices. Treat it as a positive amount taken off the total, and ask two questions. Which invoices did it pay? And which account did it land in? If Cedar Point’s $3,500 paid invoices you purchased, and it reached the client’s operating account rather than yours, you are looking at a misdirected payment.
An old balance on an aging is a question. An old balance that moves one bucket right every month is an answer.
Cross-aging
Many factoring and ABL agreements include a cross-aging rule. Once a set share of a customer’s balance is past a cutoff, often half of it over 90 days, the customer’s whole balance becomes ineligible, not just the old part.
Harbor Street has $11,450 of its $19,500 over 90 days, about 59%. Under a 50% rule, all $19,500 comes out of the borrowing base, not just the $11,450. Check your own agreement for the percentage and the cutoff.
The total that doesn’t tie
The aging total should tie to the AR control account in the general ledger, and closely to the receivables on the interim financials for the same date. Here it is $1,750 short.
Innocent causes are common: a different run date, a journal posted afterward, a customer filtered off the report. But a customer left off the aging is also how a disputed account or an offset with a vendor goes unseen. Get the reconciling items in writing.
What to ask the client
- Why each balance over 90 days is still open, and whether the customer disputes it.
- What each credit in a past-due bucket is, and which invoice it relates to.
- Which invoices each unapplied receipt paid, and which bank account it went to.
- The reconciliation from the aging total to the AR control account.
- Whether the aging runs by invoice date or due date, and that it will stay that way.
A client with a clean ledger answers these in an afternoon. The ones that take a week are the answers you were looking for.