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Accounts receivable aging calculator

Enter receivables by aging bucket or paste your invoice list and see the bad debt allowance, days sales outstanding and how much cash late payments tie up.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Nov 1, 2026

Example: a distributor that sells on 30-day terms to about 150 customers.

Receivables by aging bucket
Sales and terms

Cost of money: the interest the business pays on working capital, or what its cash would otherwise earn.

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—Allowance for doubtful accounts
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Receivables by aging bucket

Balance in each bucket, split into what should be collected and the expected loss.

Tap the chart to see the values.

Cash freed by collecting faster

Cash no longer tied up in receivables if days sales outstanding fall, with the same sales.

Tap the chart to see the values.

Allowance by bucket

Balance, share of receivables, expected loss and cash expected to come in.

Next step

Take this page’s results to another calculator with the fields already filled in.

Take days sales outstanding to working capital →Calculate late fees and interest on overdue invoices →Project the cash flow →

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Allowance = Σ bucket balance × bucket loss rate
DSO = receivables ÷ monthly credit sales × 30
Cash tied up beyond terms = max(0, DSO − terms) ÷ 30 × monthly credit sales; monthly cost = cash tied up × cost of money

Assumptions and limits

  • In the invoice list, days ≤ 0 count as current; buckets of 1–30, 31–60, 61–90 and over 90 days. Loss rates are fixed; the month’s credit sales are taken as representative.
  • This is a management estimate. Accounting allowances (IFRS 9 or local GAAP) and tax deductions for bad debts follow their own rules.

Official sources and references

Frequently asked questions

What is this calculator for?

It analyzes accounts receivable by aging bucket: how much to set aside for bad debts, your days sales outstanding and how much cash is tied up by late payments. It suits any business that invoices customers on credit terms.

How do I read the example result?

Receivables of $176,000 include $56,000 past due (31.8%). With the expected loss by bucket, the allowance is $10,440 (5.9% of receivables) and $165,560 should come in. DSO is 52.8 days against 30-day terms: that ties up $76,000, costing about $760 a month at 1% a month.

Where do I get the bucket balances?

From the accounts receivable aging report in your accounting software. If you have the invoice list, choose “Invoice list” and paste customer, amount and days past due: the calculator sorts them into buckets.

How do I set the loss rate for each bucket?

Ideally from history: of everything that reached each bucket over the past year, how much was never collected. Without history, start with conservative figures such as 1% current, 4% up to 30 days, 12% up to 60, 30% up to 90 and 60% beyond, and adjust over time.

Is the allowance tax-deductible?

Tax rules for bad debts differ from accounting rules and vary by country; many tax systems allow a deduction only when a specific debt is written off as uncollectible. Ask a tax professional how it works for your business.

How can I lower DSO?

Send reminders before the due date, follow up on day one past due, offer early-payment discounts, accept card or online payments, require deposits for large orders and cut limits for chronic late payers. In the example, each day off DSO frees about $3,333 of cash.

What are the limits of this calculator?

It uses fixed loss rates by bucket and computes DSO from one month of credit sales, which can mislead in seasonal months. It does not compute late fees or interest owed by customers; use the late fee calculator for that.

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Accounts receivable aging: allowance, DSO and cash

Selling on credit means selling before getting paid. An accounts receivable aging report shows how much of your receivables is current and how much is past due, in 30-day buckets. It supports three decisions: how much to set aside for bad debts, where to focus collection and how much cash is tied up.

Allowance for doubtful accounts

Apply an expected-loss rate to each bucket, ideally based on your own collection history. The total is the allowance: the amount you probably will not collect. Accounting standards such as IFRS 9 use this expected-loss approach.

Days sales outstanding

DSO = receivables ÷ monthly credit sales × 30. In the example, $176,000 in receivables against $100,000 of monthly credit sales gives 52.8 days, versus 30-day terms. Those extra 22.8 days tie up $76,000.

BucketBalanceLoss rateAllowance
Current$120,0001%$1,200
1–30 days$30,0004%$1,200
31–60 days$12,00012%$1,440
61–90 days$6,00030%$1,800
Over 90 days$8,00060%$4,800
Total$176,0005.9%$10,440

What to do with it

Collect early: an invoice a few days late is usually recovered with a reminder; after 90 days it often takes a payment plan, a collection agency or legal action. Tighten credit limits for chronic late payers, and take the allowance and DSO into your cash flow and working capital plans.