AR aging and cash application

Goal: as of a reporting date, determine what each customer still owes, how overdue it is, and what to do about it. Correctness depends on the order of operations and on rules that are usually implied, so enumerate them first.

1. Read all sources before computing

Read every policy document, terms file and notes in full. Tables of history (terms that changed over time, disputes, write-offs) are rules too, not decoration. Hints in a collections policy about discounts or exclusions are binding. If a rule has an obvious generic meaning (below), apply it even if only mentioned once.

2. Due dates and terms

• Due date = invoice date + terms days (Net N), or end of month + N for EOM terms. Use the terms that were in force on the invoice date, not the current terms, when a terms history exists.
• "Days past due" = reporting date - due date. Not yet due (<= 0) goes in the current bucket. Be explicit whether the due date itself counts as past due (normally not).
• Standard buckets: current, 1-30, 31-60, 61-90, 90+ days past due. Use the spec's bucket edges; boundaries are inclusive on the upper side of each bucket.
• Only invoices dated on or before the reporting date count; payments after it are ignored (as-of semantics).