Accounts receivable aging tabulated via an aged receivables report is a periodic report that categorizes a company’s accounts receivable according to the length of time an invoice has been outstanding. It is used as a gauge to determine the financial health of a company’s customers. Accounts receivable aging is useful in determining the allowance for doubtful accounts. The primary useful feature is the aggregation of receivables based on the length of time the invoice has been past due.

A company applies a fixed percentage of default to each date range.

2/10 net 30 are payment terms where the payee will receive a 2 percent A typical credit term is net 30, which means the balance is due within 30 days from the invoice date. The vendor records the credit sale and accounts receivable.

If there is one thing that credit executives agree upon, it is that they cannot agree on which measures to use in evaluating individual, departmental, and company performance. In researching the myriad measures available, it is evident that choosing an individual or group of measures is a personal, company, or industry preference. Since many organizations cannot agree among themselves on which measures to use, the person with the most authority usually dictates the measures to be reported to management.

This section is not attempting to dictate, or even suggest, which performance measures are most valid and should be used. The purpose of this section is to serve as a reference guide to readers and provide them with a comprehensive collection of performance measures used in credit, collections, and accounts receivable, hence, allowing the individual to make educated decisions on what to use and why. Dynamic credit executives plan and direct the credit, collection, and accounts receivable functions to increase sales and profits.