The balance sheet gives you one number for receivables and one for payables. The aging reports tell you what's inside them: who owes what, for how long, and who the business is slow to pay. For a buyer that's working capital and customer risk. For a lender it's collateral.
Here is what to ask for, how to check it, and what to look for once you have it.
Summary or detail
QuickBooks Online has four aging reports.
| Report | One row per | Use it for |
|---|---|---|
| A/R Aging Summary | Customer | Concentration, bucket totals, a quick read on collections |
| A/R Aging Detail | Open invoice, credit memo or payment | Testing specific invoices, eligibility, disputes |
| A/P Aging Summary | Vendor | Who the business owes and how late it's paying |
| A/P Aging Detail | Open bill or vendor credit | Cutoff, stretched payables, specific vendors |
Ask for both summary and detail when you can. The summary is what you'll put in the memo. The detail is what you'll test. A summary with a large "91 and over" balance is a question. The detail tells you whether that's one disputed invoice from 2023 or forty small ones nobody has chased.
The as-of date is everything
An aging report is a snapshot as of one date. Every bucket is measured from that date. That makes the as-of date the first thing to check and the most common thing to get wrong.
The aging must be as of the same date as the balance sheet you're comparing it to. An A/R aging as of today next to a balance sheet as of September 30 won't tie, and the difference isn't meaningful. It's just six weeks of invoices and payments.
When you request agings, request them as of your balance sheet date. If you're working off a trailing twelve months ending September 30, the agings should be as of September 30 too.
There's a second trap. QuickBooks Online ages from each invoice's or bill's due date, and its aging reports have an aging method setting: "Current" measures the days past due as of today, while "Report date" measures them as of the report's date. A seller who runs a September 30 aging in November with the method left on "Current" sends you a file whose buckets are six weeks too old. Check the setting, or spot-check a few invoices in the detail against their due dates.
Tie it to the balance sheet
Before you analyze anything:
- The grand total on the A/R Aging Summary should equal Accounts Receivable on the balance sheet as of the same date.
- The grand total on the A/P Aging Summary should equal Accounts Payable on the same balance sheet.
- Within each aging, every customer or vendor row's buckets should sum to its Total, and the rows should sum to the grand total.
If AR on the balance sheet doesn't match the aging, the usual reasons are journal entries posted directly to Accounts Receivable (which don't show up as open invoices), a different as-of date, or a cash-basis balance sheet. Cash-basis balance sheets in QuickBooks don't carry receivables the same way, which is one more reason to confirm basis on every file.
What to look for in receivables
Concentration
Sort the A/R Aging Summary by Total. If the top customer is a large share of receivables, compare that with their share of revenue on the Sales by Customer Summary. A customer who is 15% of revenue but 35% of receivables is paying slowly, and that's worth a call.
The over-90 bucket
Anything in 91 and over needs an explanation. Some of it is real and collectible: a government customer that always pays at 120 days, a retainage balance held until a project closes. Some of it is dead and should have been written off. Ask for the story behind each large balance. Ask what was collected after the as-of date. Cash received in October against a September 30 aging is the best evidence that an old invoice was real.
Credits sitting in current
Unapplied payments and credit memos show up as negative amounts, often in the Current bucket. A customer with a large credit balance in current and a large invoice in 91 and over may have paid, with nobody applying the payment. Net them before you draw conclusions, and ask the bookkeeper to clean it up before closing.
Trend
One aging is a snapshot. Two or three, as of consecutive quarter or year ends, show direction. If over-90 is growing faster than revenue, collections are slipping.
What lenders do with AR
Asset-based lenders and many bank lines size availability off receivables. The details are in each lender's credit agreement, but the common shape is the same. Start with total AR from the aging, remove ineligible receivables, and apply an advance rate to what's left.
Typical exclusions you'll see in borrowing base definitions include invoices past a stated age (90 days past invoice date is common), the whole balance of a customer when too much of it is past that age, receivables from affiliates or related parties, foreign receivables, and concentration above a set percentage for one customer. Credits and contras get netted out.
That's why a lender wants the A/R Aging Detail and not just the summary. Eligibility is decided invoice by invoice. It's also why the as-of date and the tie to the balance sheet matter so much. A borrowing base certificate built on an aging that doesn't tie to the books won't survive the first field exam.
What to look for in payables
Stretching
A business short on cash pays vendors late. Look at the A/P Aging Summary for balances in 31–60, 61–90 and 91 and over. Compare with the payment terms the business has with its main vendors. A company on net-30 terms with half its payables past 60 days is financing itself with its suppliers.
For a buyer, stretched payables inflate cash at closing and flatter working capital. When the new owner pays vendors on time, that cash goes out the door. The working capital peg should reflect normal payment behavior, not a stretched snapshot.
Vendor concentration and critical suppliers
Sort AP by vendor. A single supplier that the business depends on, sitting in 61–90, is a supply risk. Ask whether that vendor has put the business on credit hold or cash in advance.
AP against cash
Look at AP next to the cash balance on the same balance sheet. A company with $40,000 in the bank and $300,000 in payables past due has a liquidity problem the P&L won't show you.
Unrecorded liabilities
The A/P aging only shows bills that were entered. Bills that arrived but weren't entered, or services received but not yet billed, aren't there. Test it by looking at payments made in the weeks after the as-of date in the general ledger. If you find payments for pre-period services that weren't on the aging, payables were understated.
Getting the agings from QuickBooks
FinShare can request all four aging reports directly from the business's QuickBooks Online, with the owner's approval. A few specifics are worth knowing:
- Aging reports are always as of a date. You can ask for them as of the request's period end, which moves forward when you roll the request forward, or as of a fixed date.
- Agings don't take an accrual or cash setting. The basis option applies to the P&L, balance sheet, general ledger, trial balance and sales by customer.
- FinShare asks QuickBooks to age as of the report date, so the buckets are measured from the date you asked for, not the day the report was pulled.
- Before delivery, each summary aging is checked so every row's buckets sum to its total and the rows sum to the grand total.
The tie from the aging total to AR or AP on the balance sheet is still your check to make. Request the agings and the balance sheet as of the same period end in one request and you'll have matching dates by default.