Receivables aging, done properly
An aging report takes twenty minutes to build and tells you which money is still coming and which money is already gone. Most Nigerian businesses build it wrong, from the invoice date instead of the due date.
Every figure below is hypothetical. The pattern is not.
"Who owes us money?" is a question most businesses can answer. "Which of that money is still coming?" is a different question, and it is the one that matters, because a receivable at 20 days and a receivable at 120 days are not the same asset. One is cash. The other is a negotiation.
An aging report separates them. It takes twenty minutes to build the first time and five minutes a week after that.
The report
Every unpaid invoice, sorted into buckets by how overdue it is:
| Bucket | Amount | Share |
|---|---|---|
| Current — not yet due | ₦9,200,000 | 50% |
| 1–30 days overdue | ₦4,600,000 | 25% |
| 31–60 days overdue | ₦2,760,000 | 15% |
| 61–90 days overdue | ₦1,380,000 | 7.5% |
| Over 90 days | ₦460,000 | 2.5% |
| Total owed | ₦18,400,000 |
That is the whole thing. Five rows. What most businesses have instead is a single number — "customers owe us about eighteen million" — which conceals the only distinction that matters.
The mistake almost everyone makes
Age from the due date, not the invoice date.
If you sell on 30-day terms and you age from the invoice date, an invoice raised 25 days ago appears in your "1–30 days" bucket looking mildly concerning. It is not concerning at all. It is not even due yet.
Do it that way and every bucket is polluted with money that is arriving exactly as agreed, the report stops meaning anything, and you eventually stop reading it. Which is what has happened to most aging reports in most businesses.
Current means not yet due. Everything below it is late by that many days. That is the whole distinction the report exists to draw.
What each bucket is telling you
Current. Nothing to do. This is your business working.
1–30 overdue. Almost always administrative — the invoice went to the wrong person, or it missed their payment run. This is the cheapest money you will ever collect, and a single phone call recovers most of it. It is also the bucket that gets ignored, because nobody feels urgency about a fortnight.
31–60 overdue. No longer administrative. Something is wrong: a dispute nobody escalated, a delivery they claim was short, or genuine cash trouble at their end. Find out which. The answer determines everything about how you treat the next two months.
61–90 overdue. Assume this is now competing with other creditors for the same naira. Whoever asks most specifically and most persistently gets paid first, and that is not a moral observation, it is just what happens.
Over 90. Statistically, most of this does not come back in full. Decide deliberately: settle at a discount, put it on a written payment plan, or write it off and stop supplying. Leaving it on the report because writing it off feels like defeat is how businesses carry fictional assets for years.
The single number to watch: days sales outstanding
Aging tells you where the money is. DSO tells you whether it is getting better or worse.
DSO = (total receivables / monthly sales) x 30On the figures above, with monthly sales of ₦12,000,000:
(18,400,000 / 12,000,000) x 30 = 46 daysYour customers take, on average, 46 days to pay. If your stated terms are 30 days, you are financing an extra 16 days of trading for free, and the cost of that is worked out in should you sell diesel on credit.
Track DSO monthly. The absolute number matters less than the direction. A DSO climbing from 38 to 46 over a quarter is the earliest warning you will get that something has changed in your customer base — usually months before anyone actually defaults.
The weekly routine
Twenty minutes, same time each week.
- Refresh the report. Aged from due dates.
- Call everything in 1–30. All of it, every week. This is where collection is cheap and it is the bucket that decays fastest if ignored.
- Escalate anything that has crossed into 31–60 since last week. The crossing is the trigger, not the balance.
- Log every promise with its date. "He said Friday" is worthless next month. Three dated Fridays in a row is a decision.
- Check nobody is over their credit limit. If you do not have limits, that is the more urgent problem.
Why this beats chasing the biggest debtor
The instinct is to go after whoever owes most. The aging report will frequently tell you that the largest balance is current and arriving on schedule, while a set of small, quiet, 60-day balances is where your actual problem lives.
Those small ones never feel urgent enough to chase. That is exactly why they age. And in aggregate they are often the difference between paying for your next delivery out of cash or out of somebody's overdraft.