If you handle invoicing for a business, you’ve probably stared at your accounts receivable (AR) aging report and asked yourself: Are these numbers actually good? It’s a surprisingly tricky question. Businesses often settle for “we’ll get paid eventually,” but slow-paying customers can quietly sabotage your cash flow—and your sanity.
A strong AR aging percentage keeps your business financially healthy and your stress levels low. But what is a good AR aging percentage? In this article, we’ll break down what a typical AR aging percentage should look like, how to read your AR aging report, and what you can do to improve your numbers without adding more to your already full plate.
What Is AR Aging and Why Does It Matter?
AR aging tracks how long it takes your customers to pay their invoices. It breaks down your outstanding balances into “aging buckets” based on invoices with 30-day payment terms:
- 0–30 days: New invoices
- 31–60 days: Overdue
- 61–90 days: Late
- 90+ days: Very late, at risk of write-off
While the total amount owed to you matters, how long it’s owed matters even more. That’s where AR aging percentages come in. They show you not just how much you’re waiting on but how well you’re managing customer payments.
What Is a Good AR Aging Percentage?
You’re probably wondering what a typical AR aging percentage looks like. Here are the general benchmarks for healthy collections:
- 70–90% of your AR in the 0–30 day range
- 5–15% in the 31–60 day range
- Less than 5% in the 90+ day range
Numbers in these ranges show that your customers are paying on time or close to it. Of course, these numbers may vary slightly depending on your industry. But the goal across the board should be to keep the bulk of your receivables in the 0–30 day category and minimize anything over 60 days.
When to worry:
- Your 90+ day bucket is creeping above 5–10%.
- Your 31–60 day segment is growing month after month.
- You notice the same customers repeatedly falling behind.
These are your cues to tighten up your invoicing system and payment follow-ups.
How to Interpret Your AR Aging Report
An AR aging report gives you a snapshot of how long your invoices have been outstanding, but the real value comes from spotting trends over time. If you notice a growing balance in the 90+ day bucket, it’s a sign of chronic late payers or unresolved invoice issues that need immediate attention. The same goes for the 31–60 day category. Too many invoices in this age range could mean your follow-up process needs tightening or that your payment terms aren’t clear or strict enough.
You might also consider looking into your payment system to see if it’s making it easy for customers to pay. If you’re not offering convenient online options, delays are more likely. Platforms like Chargezoon’s invoicing tool help businesses simplify the payment process.
As you interpret your AR aging report, consider the bigger picture. Are seasonal delays really just a seasonal slowdown, or are they part of a systemic issue? Recognizing the difference helps you respond with the right strategies, whether that means adjusting your terms or automating a reminder. The more you pay attention to patterns, not just numbers, the easier it is to stay ahead of potential cash flow problems.
How to Improve Your AR Aging
If your AR aging percentages aren’t where you want them to be, don’t panic. Here are some practical ways to turn things around—without working overtime.
1. Set Clear Payment Terms Upfront
Be explicit with your due dates and late fees. Vague terms lead to vague payment timelines.
2. Automate Your Follow-Ups
Some of the biggest delays in payments come from a lack of reminders. Try Chargezoom to automatically send email or text reminders when invoices are due or overdue.
3. Offer Early Payment Incentives
A small discount can motivate customers to pay early, reducing your average AR aging.
4. Enforce Late Fees Consistently
Late fees aren’t about being punitive—they’re about setting expectations. If you never charge late fees, your terms carry less weight.
5. Segment Customers by Payment Risk
Some clients always pay late. Some never do. Segmenting helps you tailor your outreach, reminders, and terms more effectively.
6. Cut Out Inefficiencies
Manual processes like downloading CSV files, importing data into accounting software, or reconciling payments eat up your time. Chargezoom automates these workflows, giving you more hours in the day and improving your cash flow.
Want more tips on invoicing and follow-ups? Check out:
- How to Make a Professional Request for Payments Through Email
- 5 Foolproof Tips to Create an Invoice That Performs
Your AR Aging Percentages Should Work for You
Strong AR aging percentages are more than just good-looking numbers. They’re the heartbeat of your cash flow. Whether you’re sitting comfortably at 85% in the 0–30 day range or trying to climb out of a 60+ day slump, one thing is clear: The faster you get paid, the smoother your business runs.
Ready to streamline invoicing, automate reminders, and reduce aging without adding more to your workload? Try Chargezoom today and see instant results.
