What is Receivables Aging?
A receivables aging report classifies a company’s open customer invoices by the number of days they have been outstanding, helping finance and collections teams identify slow-paying customers and estimate bad debt.
How It Works
- Extract all open customer invoices from the general ledger.
- Group them by customer and by days past the invoice due date.
- Create standard buckets — current, 1-30, 31-60, 61-90, and over 90 days.
- Review each bucket to estimate the allowance for doubtful accounts.
- Trigger follow-up actions: reminder, dunning letter, payment plan, or legal escalation.
Saudi Context
ZATCA permits Saudi VAT registrants to claim bad debt relief on invoices that are at least 12 months past due and have been written off in the books, provided specific evidence is retained. The aging report is the primary document used to support this relief.
Example
A SaaS company shows SAR 900K of receivables: SAR 500K current, SAR 250K in 1-30 days, SAR 100K in 31-60 days, and SAR 50K over 90 days. The 90+ bucket is provisioned at 60%, adding SAR 30K to bad debt expense.