Aged receivables: who owes you, and for how long

What is an aged receivables report?

Your receivables are the money customers owe you for work already done or goods already delivered; business.gov.au describes accounts receivable as the short-term amounts customers still need to pay. An aged receivables report takes that list and adds one question: how long has each amount been waiting?

It is a table with one row per customer and one column per age bucket: current (not yet due), then 1–30 days past due, 31–60, 61–90 and over 90. Each invoice sits in one column, and the bottom row totals each bucket and the whole list.

Age invoices from the due date if you can: an invoice on 30-day terms sent three weeks ago is not late. Whichever date you use, keep it the same every month, because the report earns its keep by comparison.

How do you read an aged receivables report?

Take an invented design studio at the end of October. The café client owes $4,400: $2,750 current and $1,650 between 1 and 30 days late. The joinery owes $3,300, all current. An agency owes $1,980, 31–60 days late, and a one-off client owes $2,200 on an invoice more than 90 days past due. The columns total $6,050 current, $1,650 at 1–30 days, $1,980 at 31–60, nothing at 61–90 and $2,200 over 90: $11,880 in all, GST included.

Three readings matter more than the grand total. The share overdue: $5,830 of $11,880, about 49%. The far right: $2,200, almost a fifth of everything owed, is over 90 days, where each month of waiting makes it less likely to arrive. And movement: beside last month’s report, a customer whose balance has slid a column to the right is telling you something before they say it.

Look at concentration too. When one customer holds most of the current column, a single late payment from them changes your month — a cash flow forecast shows what it would do to your balance before it happens.

What should you do at each stage?

Current: make sure the invoice arrived, shows a due date and says how to pay. Plenty of slow payments start as an invoice sitting in the wrong inbox.

1–30 days: send a polite reminder by email or phone, with the invoice attached and your payment details in the message. As business.gov.au points out, a missed payment could just be an oversight.

31–60 days: pick up the phone, ask when the payment will be made and agree a date. If the customer is genuinely stretched, offer a payment schedule of smaller regular amounts, write down what was agreed, and consider holding new work on credit until the account is back on track.

61–90 days: put it in writing. A letter of demand sets out what is owed, by when, and what happens next. business.gov.au also points to low-cost dispute resolution or mediation when the amount itself is contested, and to debt collection services when it is not.

Over 90 days: decide. Depending on the amount, the next step is legal advice or a claim in your state’s small claims tribunal — or the judgement that chasing will cost more than it returns. business.gov.au notes that sometimes the best course is to stop chasing and write the debt off.

When is a debt bad, and what happens to the GST?

In Australia it depends on how you account. On an accruals basis you counted the invoice as income when you issued it. Once you decide the debt is bad — genuinely unlikely to be recovered, not merely doubtful — and record the write-off in writing before the end of the income year, you can generally deduct the amount you included in your income. On a cash basis the invoice was never income, so writing it off changes nothing for income tax.

GST follows the same logic. Accounting for GST on an accruals basis, you paid the GST on the sale in the BAS for the period you invoiced. You can claim it back as a decreasing adjustment once the debt is written off as bad or has been overdue for 12 months or more, in the tax period you write it off or become aware it is 12 months overdue. For a fully taxable sale the adjustment is one-eleventh of the amount. On a cash basis there is nothing to reverse, because GST is only reported on money received.

In the example, writing off the $2,200 invoice gives a $200 decreasing adjustment and, on an accruals basis, a $2,000 deduction for the income it had added. If the client pays after all, the money goes back into income and an increasing adjustment hands the GST back. Writing a debt off is not forgiving it: the customer still owes you, and the ATO treats waiving or forgiving a debt differently.

In the United Kingdom the VAT version is bad debt relief, which you can claim once at least six months have passed from the later of the payment’s due date and the date of supply, provided you accounted for and paid the VAT and wrote the debt off in your VAT accounts. Under the VAT Cash Accounting Scheme it is not needed, because VAT is only paid on what customers have paid. This is general information, not personal tax advice — check what applies to you with your accountant or the relevant tax authority.

What is an aged payables report?

The same table turned around: what you owe your suppliers, sorted by how long each bill has been outstanding. business.gov.au describes accounts payable as the record of short-term amounts you need to pay.

Read it to pay on time without paying early. Bills in the current column are within terms; anything sliding right risks late fees, a supplier that wants cash up front, or a credit account put on hold. Beside the receivables report it shows the month’s real cash position: money due out against money you can count on coming in.

It has a GST mirror too. If you claimed a GST credit on a supplier’s bill you have not paid, and the supplier writes the debt off or it becomes 12 months overdue, you have an increasing adjustment: the credit goes back, and returns when you pay.

How does 2Fin help?

In 2Fin the lists behind both reports build up as money moves. Each amount a customer owes is expected income and each supplier bill is a bill, side by side on Upcoming. Upload a PDF or photo of an invoice, or forward it by email on AUTO+, and Fin asks whether you sent it or have to pay it, then adds it to the right side.

On ELITE+ and AUTO+ you can write the invoice in 2Fin, send it as a PDF or by email, and Fin matches the payment when it reaches your bank; the cash flow forecast then draws your next 30, 60 or 90 days from those bills and invoices owed. To see what a statement you already have says — what you kept, a rough BAS and what is due next — try it on your own bank file, read in your browser.

The same plans lay both lists out as reports: aged receivables and aged payables by customer or payee — not yet due, 1–30, 31–60, 61–90 and over 90 days, per currency — as CSV or print. For the invoices you send from 2Fin, your customer can open a page of their own and pay through your own payment link, and you can turn on overdue reminders for the days after the due date you choose.