What an Aged Debtors Report Is
An aged debtors report lists every customer who owes you money and splits each balance by how old the unpaid invoices are. It is also called an aged receivables report, a debtor ageing report or an aged debtor analysis. They are the same thing.
A typical layout has one row per customer and five columns:
| Customer | Current | 1 to 30 days | 31 to 60 days | 61 to 90 days | Over 90 days | Total |
|---|
"Current" means not yet due. The other columns count days overdue, or days since the invoice date, depending on how your software is set up. More on that below, because it changes the picture more than most people expect.
The total of the report is your trade receivables figure, the amount that sits under debtors in your current assets on the balance sheet. The report is just that one number broken down by customer and by age.
Why It Matters More Than the Total
A debtors balance of £70,000 tells you very little. It could be £70,000 of invoices raised last week, which is healthy. It could be £70,000 that has been sitting there since spring, which is a cash flow crisis waiting to happen.
The aged report answers three questions the total cannot:
- Who do I chase today? The biggest overdue balances, sorted by size.
- Is anything turning bad? Balances moving steadily to the right, column by column, month after month.
- Is my credit control working? The share of the total that is current or only slightly overdue.
We use it alongside debtor days. Debtor days is an average that tells you the trend. The aged debtors report tells you which customers are causing it. You need both, because one very slow payer can push debtor days up while everyone else pays on time.
How to Run One in Your Software
Every accounting package produces this report. The names vary slightly.
- Xero: Accounting, Reports, then Aged Receivables Summary or Aged Receivables Detail. Our Xero clients usually save the summary as a favourite.
- QuickBooks Online: Reports, then Accounts Receivable Ageing Summary.
- Sage Accounting and Sage 50: Under Customers or Reports, look for Aged Debtors.
- FreeAgent and QuickFile: Both have a debtor ageing report under their reports or invoicing sections.
Two settings matter before you read anything.
The date. Run it at a month end, not today, if you want to compare it with last month. A report run on the 3rd includes payments that landed on the 1st and 2nd, which makes it look better than the month end position.
Ageing by invoice date or due date. Xero and several others let you choose. Ageing by invoice date puts an invoice raised 40 days ago into the 31 to 60 column, even if your terms are 60 days and it is not late at all. Ageing by due date only counts days past the agreed payment date. For chasing customers, we always use due date. For comparing with debtor days, invoice date is closer. Pick one, write it down and stick to it, otherwise this month's report and last month's are not comparable.
The Three Checks Before You Trust It
A report is only as good as the sales ledger behind it. Before anyone makes a decision from an aged debtors report, we run three checks.
1. Does It Agree to the Balance Sheet?
The total of the aged debtors report should equal the trade debtors control account in your general ledger, and therefore the figure on your trial balance. In most cloud software it will, because the report and the ledger come from the same data. Where it does not, the usual causes are journals posted directly to the debtors control account, opening balances brought in wrongly from old software, or a currency revaluation that has not been run. If the numbers do not agree, fix that first.
2. Is There Unallocated Cash?
When a customer pays and nobody matches the payment to a specific invoice, the software often shows it as an unallocated credit in the current column. The old invoice it was meant to pay stays in the 61 to 90 or over 90 column. The customer looks both very late and slightly in credit at the same time.
This is the single most common distortion we see. It usually comes from payments with vague references and no remittance advice. It also means a customer gets a chaser for an invoice they have already paid, which does nothing for the relationship.
3. What Is Sitting in the Over 90 Column?
Not everything old is overdue. Look for:
- Retentions. In construction, a customer may hold back 3% to 5% of each valuation until the end of a defects period. That money is not late. It is not due yet. Retentions should be tracked separately, not mixed in with genuinely overdue debt.
- Credit balances. A credit note that was never matched against an invoice, or a customer who paid twice. These need sorting and, if owed back, refunding.
- Disputed invoices. These need a different conversation from slow payers, and they often need a decision about whether the work was right in the first place.
- Genuinely dead debts. Customers who have gone into liquidation or stopped responding. These belong in the bad debts process, not on the chase list.
A Worked Example: Ashgrove Electrical Ltd
Ashgrove Electrical Ltd is a contractor in Hertfordshire with a mix of commercial and domestic work, on 30 day terms. The director asked us to look at the aged debtors because "over 90 days is nearly 18% and it keeps creeping up".
The report at 31 October 2026, aged by due date, looked like this:
| Customer | Current | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | Total |
|---|---|---|---|---|---|---|
| Hartley Homes | £18,400 | £9,200 | £0 | £0 | £0 | £27,600 |
| Northgate Property Management | £2,400 | £4,100 | £5,800 | £3,900 | £0 | £16,200 |
| Penfold Schools Trust | £7,200 | £0 | £0 | £0 | £0 | £7,200 |
| Riverside Lettings | £0 | £0 | £0 | £2,450 | £6,850 | £9,300 |
| Coles and Sons Builders | £0 | £0 | £0 | £0 | £4,750 | £4,750 |
| Domestic customers (14) | £3,100 | £1,650 | £420 | £0 | £980 | £6,150 |
| Total | £31,100 | £14,950 | £6,220 | £6,350 | £12,580 | £71,200 |
The headline was right on paper. £12,580 over 90 days is 17.7% of £71,200. Then we went through the three checks.
The report agreed to the balance sheet. No problem there.
Northgate's current column included a £3,900 unallocated payment. It had arrived on 24 October with the reference "NPM OCT" and the bookkeeper had posted it to the account without matching it. It paid the £3,900 invoice in the 61 to 90 column exactly. Once allocated, Northgate's current balance rose to £6,300 and its 61 to 90 balance dropped to nil. Northgate had also been sent two reminders for that invoice.
The £4,750 from Coles and Sons was retention. It was 5% held back on a fit out that finished in April, due for release at the end of a 12 month defects period. It was not late and would not be until April 2027.
With those two fixed, the over 90 column fell from £12,580 to £7,830, or 11.0% of the total. Of that, £6,850 was a single customer, Riverside Lettings, and £980 was one domestic job where the customer disputed a socket move.
So the real picture was very different from the headline:
- Riverside Lettings was the problem. £9,300 owed, all of it more than 60 days late. A quick check at Companies House showed its accounts were overdue and a first Gazette notice for strike off had been published. We advised stopping work for them that week, sending a formal letter claiming statutory interest, and making a specific provision against the balance in the October management accounts.
- Northgate was drifting, not failing. It paid, but it paid later each quarter, and it now had £5,800 in the 31 to 60 column. That called for a phone call to its accounts payable team and a check that Ashgrove's invoices were going to the right inbox with a purchase order number on them.
- The domestic dispute needed a site visit, not another reminder.
- Hartley Homes was fine. £9,200 slightly overdue on a £27,600 balance from Ashgrove's biggest customer, which always pays a couple of weeks late but always pays.
Our view from this example, and from most aged debtor reviews we do: the over 90 percentage is a poor headline. It mixes timing issues, retentions and bookkeeping errors in with genuine credit risk. Clean the report first. Then look at customers, not columns.
What Good Looks Like
There is no official benchmark, and it depends heavily on your sector and terms. As a rough guide for a small UK business selling to other businesses:
| Measure | Healthy | Worth a look | Needs action |
|---|---|---|---|
| Current plus 1 to 30 days | Over 80% of total | 65% to 80% | Under 65% |
| Over 60 days | Under 5% | 5% to 15% | Over 15% |
| Largest single overdue customer | Under 10% of total | 10% to 25% | Over 25% |
The last line gets overlooked. Concentration is often a bigger risk than age. A business owed 40% of its debtors by one customer is exposed even if that customer pays on time today.
From Aged Debtors to Bad Debt Provisions
At the year end, your accountant uses the aged debtors report to decide whether any balances need writing down. Under FRS 102, the accounting standard most UK small companies follow, a debt should be reduced if there is objective evidence that it will not be collected in full.
Some larger businesses apply a set percentage to each ageing column, for example 1% of current, 5% of 31 to 60, 25% of 61 to 90 and 50% of over 90. For a small company we do not like this approach. It produces a number that looks precise without anyone having looked at the customers. We prefer a specific review of each balance over 60 days, with a reason written down for every provision.
There is also a tax reason. HMRC generally allows a deduction for a specific provision against a named debt that has been properly estimated, but not for a general percentage provision across the whole ledger. A blanket provision can reduce your profit in the accounts and then have to be added back in the corporation tax computation, which is extra work for no benefit.
For VAT, bad debt relief on an unpaid invoice becomes available once it is more than six months overdue and has been written off in your accounts. The aged debtors report is the easiest place to spot invoices crossing that line. Our bad debts guide covers the full process.
Aged Debtors and Borrowing
If you use invoice finance, the aged debtors report is effectively your borrowing base. Lenders typically advance a percentage of eligible debts, and most facilities treat invoices over 90 days old as ineligible. Many also cap how much of the facility can come from a single customer.
That means a slipping ledger does two things at once. It delays the cash from customers, and it reduces how much you can draw against the debtors that remain. Businesses on invoice finance should review the aged report weekly, not monthly.
Banks and buyers will look at it too. A lender assessing an overdraft or loan, or a buyer doing due diligence on a sale, will ask for an aged debtors report at the year end and at the latest month end. A clean report with no unexplained old items is a quiet signal that the business is well run. Our guide on how to value a business explains why working capital comes up in nearly every sale.
Aged Creditors: The Other Side
The aged creditors report, also called aged payables, is the same report for your suppliers. It lists who you owe, split by how old each bill is. The total should agree to your trade payables control account.
We use it for three things:
- Planning payment runs. Pay what is due, not what is shouting loudest.
- Spotting missing or duplicate bills. If a regular supplier has nothing showing this month, an invoice is probably sitting in someone's inbox. Reconcile against the supplier's statement of account each month.
- Protecting supplier relationships. A supplier you have paid late three months running may quietly put you on stop or move you to pro forma terms.
Large companies have to publish their average payment times under the payment practices reporting rules, and many sign up to the government backed Fair Payment Code. If a big customer is paying you far slower than it reports, that is useful information when you raise it with them.
Put your aged debtors and aged creditors side by side and you can see your short term working capital position at a glance. If customers are paying you in 55 days and you are paying suppliers in 25, the gap is coming out of your bank account. A cash flow forecast built from both reports is far more reliable than one built from payment terms.
How Often to Review It
- Weekly if you are on invoice finance, have a tight overdraft, or have a few large customers.
- Monthly for most small businesses, as part of the month end close.
- At every VAT quarter, to spot invoices that qualify for bad debt relief. See our guide to VAT for the basics.
- At the year end, to support any bad debt provision and to agree the figure in your accounts.
Our practical rule is that whoever reviews the report should leave with a short list: who gets a phone call, who gets put on stop, and what needs fixing in the ledger. If the review produces no actions, either everyone is paying on time or nobody is really reading it.
Common Mistakes
- Reading the over 90 percentage without cleaning the report first. Unallocated cash and retentions can inflate it badly.
- Switching between invoice date and due date ageing, which makes month on month comparisons meaningless.
- Chasing every overdue invoice the same way. A disputed job, a slow but reliable customer and a failing one need three different responses.
- Ignoring credit balances. Customer money sitting on your ledger may need to be refunded.
- Never agreeing the report to the balance sheet. If the two disagree, neither can be trusted.
- Using blanket percentage provisions in a small company, which are rarely right and often not tax deductible.
How IAK Can Help
We work with small businesses, limited companies and construction companies across North London and Hertfordshire. Nearly every new client we take on has an aged debtors report that does not quite tell the truth, usually because of unallocated payments, old credit notes or retentions mixed in with real debt.
Our bookkeeping team keeps the sales and purchase ledgers matched and reconciled so the aged reports can be relied on. Our management reporting service turns them into a short monthly list of actions, alongside debtor days, creditor days and a cash forecast. Our accounting team uses them at the year end to support provisions and bad debt relief. If your debtors keep growing and you are not sure why, get in touch.
Sources
- FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, Financial Reporting Council, Section 11 covers impairment of basic financial assets including trade debtors.
- Business Income Manual, HMRC, for HMRC's approach to the deductibility of bad and doubtful debt provisions.
- Relief from VAT on bad debts (VAT Notice 700/18), GOV.UK, for the six month rule and record keeping requirements.
- Late commercial payments: charging interest and debt recovery, GOV.UK, for statutory interest at 8% plus the Bank of England base rate and fixed recovery sums.
- Check payment practices, GOV.UK, where large companies publish how quickly they pay their suppliers.