Example
Invoice dated the 1st, net 30 terms, today is the 20th of the following month. Due on the 31st, so it is 20 days past due, not 50 days old.
What it means in practice
Days past due is counted from the due date. An invoice raised 45 days ago on net 30 terms is 15 days past due. Counting from the invoice date instead makes everything look a month worse than it is.
It is the number every aging report, every late fee clause and every accounts department uses, which is why using the same one keeps a conversation short.
Zero or negative means the invoice is not late at all, however old it looks.
The mistake to avoid
Chasing on day 31 of the invoice's life rather than day 31 of the terms, and sounding unreasonable to a client who has not actually done anything wrong.
Work it out
Why the figure is worth agreeing
Both sides usually have a days-past-due number and they often disagree, because one is counting from the invoice date and the other from receipt, or because one side's terms start at the end of the month. Quoting yours with the due date beside it turns a disagreement about lateness into a two-line check.
A second example
An invoice dated 3 June on net 45 terms, chased on 1 August. It is fifty-nine days old and fourteen days past due. Fourteen is the number to use in the conversation, and it is the number that puts the invoice in the first aging bucket rather than the second.
Related terms
- Aging bucketOne of the age bands an unpaid invoice falls into: current, 1 to 30, 31 to 60, 61 to 90, or over 90 days past due.
- Business daysWorking days, Monday to Friday, used in contracts and terms where weekends do not count.