AR/AP Aging Analyzer

When to use

Use whenever cash collection or payment timing needs attention — collections are slipping, payment terms need review, or a working capital or cash flow analysis needs real DSO/DPO numbers instead of an estimate. Especially useful when the current AR/AP process has a full list of open items but no ranking of which ones actually matter most.

What it does

Buckets every receivable and payable into standard aging buckets (0-30, 31-60, 61-90, 90+ days) via a bundled calculator, computes DSO and DPO from the totals, ranks the largest overdue receivables as explicit collection priorities, and flags when the gap between DSO and DPO shows the business is funding its own working capital by paying suppliers faster than it collects from customers.

Method

1. Pull every open receivable and payable with amount and days outstanding — not a summary total, since the aging distribution and the specific accounts matter more than the aggregate number.
2. Run the bundled calculator (scripts/aging_analyzer.py) to bucket both AR and AP into standard aging bands and compute the dollar amount and percentage in each.
3. Read the 90+ day bucket first. Accounts this old are the ones most at risk of never being collected, and the ones most worth understanding individually rather than as a percentage.
4. Use the calculator's ranked collection priority list (largest overdue receivables, 60+ days) to focus collection effort on dollar impact, not just whichever account happens to come up first alphabetically or whichever customer called first.
5. Compute DSO and DPO from annual revenue and COGS respectively, giving a standardized measure of how fast the business collects versus how fast it pays, comparable period to period and against benchmarks.
6. Read the DSO-DPO gap explicitly. A large positive gap (DSO well above DPO) means the business pays suppliers faster than it collects from customers, funding that gap out of its own working capital — worth naming as a specific, actionable finding, not just background context.
7. Turn the findings into two concrete actions: a prioritized collection call list for the largest aged receivables, and a review of whether supplier payment terms can be extended to close some of the DSO-DPO gap without damaging the relationship.