Payments & Liens

Invoice Aging

Also known as: AR Aging, Aged Receivables

The categorization of unpaid invoices by how long they have been outstanding (current, 30, 60, 90+ days).

Invoice aging is the standard way contractors monitor their accounts receivable. Outstanding invoices are bucketed by age: current (not yet due), 1 to 30 days past due, 31 to 60 past due, 61 to 90 past due, and over 90 past due. The aging report is the dashboard for cash flow problems before they become crises. Invoices that hit 60+ days past due are statistically much less likely to ever be collected.

Well-run contractors review the aging report weekly. Standard escalation: friendly reminder at day 5 past due, formal demand letter at day 15, lien notice at day 30, lien filing at day 45 to 60 (varies by state lien deadline), and collection or legal action at day 90. Most contractors who go out of business have a healthy P&L but a broken aging report. Cash flow, not profitability, is what kills construction businesses.

Frequently asked questions

What aging buckets are standard?+

Current (not yet due), 1 to 30 days past due, 31 to 60 days past due, 61 to 90 days past due, and over 90 days past due. Some software adds finer buckets (1-15, 16-30) for accelerated AR management.

When should I escalate a past-due invoice?+

Friendly reminder at 5 days past due. Formal demand letter at 15. Notice of intent to lien at 30. Mechanics lien filing within the state's deadline (typically 60 to 120 days from last work). Don't miss the lien deadline; once it passes, your security is gone.

What aging report metrics matter most?+

Total AR over 60 days as a percentage of total AR (should stay under 10% on healthy businesses), average days sales outstanding (DSO, should track to your standard payment terms), and the count of invoices over 90 days (should be near zero on collectible work).

Related terms

Progress Billing

Splitting contract value across multiple invoices tied to milestones or percent-complete intervals.

Mechanic's Lien

A legal claim filed against a property by a contractor, sub, or supplier when payment is not received as agreed.

Preliminary Notice

A pre-lien notification required in most states for contractors and suppliers to preserve mechanics lien and bond claim rights.

Pay-When-Paid (vs Pay-If-Paid)

Pay-when-paid delays sub payment until GC is paid. Pay-if-paid conditions sub payment on GC payment. Different legal effects.