Debtors Age Analysis: How to Read It and Get Paid Faster

Profitable businesses run out of cash because of debtors. The age analysis is the report that tells you it is happening while you can still do something about it.

What the report shows

A debtors age analysis lists every customer with an unpaid balance and splits that balance by how overdue it is:

Customer	Current	30 days	60 days	90 days	120+	Total
Customer A	18,400	0	0	0	0	18,400
Customer B	6,000	9,200	0	0	0	15,200
Customer C	0	0	4,600	12,000	22,000	38,600
Total	24,400	9,200	4,600	12,000	22,000	72,200

Read that table and the situation is obvious. Customer C is 88% of your problem and none of their balance is current. Customer A pays on time. Customer B is drifting.

Without the ageing split you would just see R72,200 outstanding and no idea where to spend your Monday morning.

How to read the buckets

Current. Within terms. Nothing to do.

30 days. Recently overdue. Usually an oversight — a lost invoice, a person on leave, an approval sitting in someone's inbox. A polite reminder recovers most of this.

60 days. No longer an oversight. Either there is a dispute you have not been told about, or the customer is managing their own cash flow at your expense.

90 days. Genuinely at risk. Recovery rates fall sharply here.

120+ days. Assume you will need to fight for it. Some of this will never arrive.

The metric worth tracking

Days Sales Outstanding (DSO) tells you how long, on average, you wait to get paid:

DSO = (Debtors ÷ Credit sales for the period) × Days in the period

If your terms are 30 days and your DSO is 62, you are financing your customers for an extra month. Track the trend, not the absolute number — a DSO climbing month over month is an early warning well before it shows up in your bank balance.

What actually collects money

Invoice immediately. The clock does not start until the invoice is issued. A week of internal delay is a week of financing you gave away for free.

Put terms on the invoice. "Payment due within 30 days of invoice date" and a specific due date. "Payment on receipt" is not a term anyone acts on.

Reminder at 7 days before due. Not a chase — a courtesy. It also flushes out "we never received this" before it becomes an excuse.

Reminder on the due date. Short, factual, with the invoice attached again.

Call at 14 days overdue. Email is easy to ignore. A phone call to the person who authorises payment gets a real answer, including "we are disputing line three", which you needed to know two weeks ago.

Formal letter of demand at 60 days. It changes the tone and creates a record.

Stop supplying at 90 days. Continuing to deliver to a customer who has not paid for the last three months is a decision to increase your exposure.

Escalate at 120 days. Legal action or a collections agency. Weigh the cost against the balance honestly.

Preventing the problem

Credit-check new customers before extending terms, particularly for large orders.

Set credit limits and enforce them.

Take deposits on large or first-time jobs.

Make paying easy. Bank details on every invoice, and multiple payment options. Friction delays payment.

Offer an early settlement discount if your margins allow it. A 2% discount for payment within 7 days is often cheaper than 60 days of financing.

Concentration risk. If one customer is 40% of your debtors book, your business has a single point of failure.

Writing off

When recovery is genuinely unlikely, write it off. Carrying a fictional asset on your balance sheet distorts every decision you make from it.

Two things to get right:

Record the write-off properly so the debtor ledger reflects reality.

If you accounted for output VAT on the original invoice, a bad debt written off may permit a VAT adjustment. Do not simply delete the invoice — that breaks the audit trail and loses the adjustment.

Automating the follow-up

Credit control fails because it is repetitive and nobody enjoys it. That makes it a software problem.

LEDGA produces a live debtors age analysis from your invoices, flags what has crossed each ageing threshold, and sends payment reminders automatically so the 7-day and due-date nudges happen whether or not anyone remembers.

Review the report weekly and work the 30-day column. Almost everything that becomes a 120-day problem was a 30-day problem you did not action.

Try LEDGA free.