Accounts Receivable Aging
Also known as: AR Aging, Receivables Aging
Definition
Accounts receivable aging shows whether reported revenue is converting into cash. It groups receivables by age, usually current, 30, 60, 90, and 120+ days, so operators can identify collection risk, dispute patterns, customer health issues, and working-capital pressure.
AR aging is where revenue quality starts to become visible. A company can show growth on the income statement while cash gets trapped in disputes, slow collections, or customers that were never healthy.
For diligence and turnaround work, aging quality often matters as much as the headline revenue number.
Related terms
- Cash Runway — The number of months a company can operate before cash runs out at the current burn rate.
- Net Working Capital — Current operating assets minus current operating liabilities. In M&A, the working-capital peg can materially change cash delivered at close.
- Revenue Recognition — The accounting policy that determines when contracted customer value becomes recognized revenue.
Where this gets applied
- Unit Economics — CAC payback, NRR, gross margin by segment, cohort analysis, paid-on-bookings vs. paid-on-cash.
- Financial Infrastructure — ARR waterfalls, deferred-revenue rules, board-pack standardization, FP&A architecture.
- Exit Readiness — Pre-LOI cleanup. Financial reporting normalization, contract hygiene, IP assignment review, customer-concentration mitigation.