Receivables Ageing explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The prescribed format does not, on its own, add up to the balance sheet — which is why two columns have to be put in front of it.
The two columns added to the receivables ageing
This disclosure requires the company to provide ageing of the trade receivables outstanding as on the balance sheet date and as per the prescribed format.
However, in order to tie up the amounts presented in the "total" column with the amounts presented in the financial statements or notes, two additional columns with the heading "Unbilled" and the heading "Not due" shall be added before the ageing columns, to separately disclose the amount for unbilled receivables and the amount of trade receivables which are not due respectively.
An ageing schedule ages amounts from a due date. Two populations of trade receivables have no due date that has yet passed, and so fit nowhere in the buckets.
Not due — invoiced, but payment is not yet contractually due. In a healthy book this can be most of the balance.
Unbilled — an entity could have an unconditional right to consideration before it invoices its customers, in which case it records an unbilled receivable. For example, this could occur if an entity has satisfied its performance obligations but has not yet issued the invoice. Note that this is a genuine receivable, not a contract asset, precisely because the right is already unconditional.
Without the two columns the ageing total would be smaller than the trade receivables figure on the face of the balance sheet, and a reader could not reconcile the two. The additional columns are the Guidance Note's remedy for a prescribed format that would otherwise not foot.
The cross-check against the credit sub-classification
The amounts presented under disputed and undisputed categories for each category of credit profile should add up and match with the total amount presented in a separate disclosure for the same category of credit profile.
The worked illustration: the amount of "Undisputed Trade Receivables – considered good" and "Disputed Trade Receivables – considered good", when added up, should match with the added up amount of "Trade Receivables considered good – Secured" and "Trade Receivables considered good – Unsecured" provided as part of a separate disclosure.
So the two disclosures cut the same population on different axes — one by credit stage and security, the other by dispute status and age — and the totals for each credit profile must agree across both.
When the receivables ageing clock starts
| Situation | Ageing measured from |
|---|---|
| Due date agreed, in writing or orally | The due date of the invoice — generally considered to be the date on which the payment of an invoice falls due, determined based on terms agreed upon between the buyer and supplier |
| Due date neither agreed in writing nor orally | The transaction date |
And the transaction date is itself defined by reference to the standard: Ind AS 115 requires that an asset arising from a contract with customers be recognized as a receivable when the entity's right to consideration is unconditional (that is, when payment is due only on the passage of time), and such recognition date, which is based on reasonable evidences in compliance with the principles of the applicable accounting standards, can be considered as the transaction date for the purpose of ageing disclosure.
Assembling the receivables ageing schedule
- Add Unbilled and Not due columns before the ageing buckets.
- Age the remainder from the due date, or from the transaction date where none was agreed.
- Split each credit profile between undisputed and disputed.
- Check that each credit profile's disputed and undisputed total agrees with the corresponding credit sub-classification disclosure.
- Check that the grand total agrees with trade receivables in the balance sheet.
Common mistakes
- Running the receivables ageing from the invoice date rather than the due date.
- Omitting the unbilled and not due columns so the schedule cannot be reconciled.
- Classifying unbilled amounts as contract assets where the right is already unconditional.
- Failing to tie the disputed and undisputed split back to the credit sub-classification.