Accounts receivable aging
An accounts receivable aging report lists every unpaid customer invoice grouped by how long it has been outstanding, usually current, 1-30, 31-60, 61-90 and over 90 days.
It shows which customers are paying slowly before cash gets tight. The older an invoice gets, the less likely it is to be collected in full.
Example
A contractor has $12,000 outstanding. $7,000 is current, $3,000 is 31-60 days old and $2,000 is over 90 days. The $2,000 is the one to call about today, and the one to consider writing off if it never arrives.
Common mistake
Reading the total and ignoring the buckets. A large total of current invoices is healthy. The same total weighted toward 90+ days is a cash problem.
How to use it
Check it monthly. Follow up on anything past terms, and decide in advance when an old invoice becomes a bad-debt write-off.