A/R aging & bad debt history

What it is

An A/R aging report buckets every outstanding customer invoice by how long it's been unpaid — current, 30 days, 60, 90, and beyond. Paired with the business's bad debt history, it shows not just what customers owe today, but the business's actual track record of collecting what it's owed.

Why it matters

Revenue on the P&L isn't cash in the bank until it's collected. A business that looks profitable on paper but is carrying a growing pile of receivables no one is chasing down may be overstating how healthy its cash flow really is — and you inherit that collections problem, and that customer relationship, on day one.

What to look for

• A growing share of receivables aged past 90 days
• Bad debt write-offs trending upward year over year
• Overdue balances concentrated in one or two customers rather than spread across the book
• No formal collections process — invoices that just sit until someone remembers to follow up