The aged creditors report

An aged creditors report lists what the business owes each supplier, split into columns by how long each invoice has been outstanding or overdue. Used properly it drives the payment run, keeps the business inside agreed terms and flags errors such as duplicate invoices, unallocated payments and suppliers with debit balances. Before relying on it, check that its total agrees to the trade creditors figure in the nominal ledger.

What does an aged creditors report show?

The report, sometimes called the aged payables report, is produced from the purchase ledger. Each supplier has one row: the total balance, then the same balance split into age bands such as not yet due, 1 to 30 days overdue, 31 to 60 days overdue and over 60 days overdue. Most software can age either by invoice date or by due date.

• By due date shows what is genuinely late and what falls due in the next few weeks. It is the version to use for planning payments.
• By invoice date shows how old the debts are regardless of terms. It is useful for spotting invoices that have been sitting unpaid for a long time even where generous terms were agreed.

Pick a basis and keep it; switching between them makes trends meaningless. The report should be run as at a date, usually a month end, and its grand total should match the purchase ledger control account on that date. If it does not, the difference needs to be found first; see sales and purchase ledger control accounts. The invoices on the report come from the purchase day book, explained in sales and purchase day books explained.

How do you read the report?

1. Total and trend. Compare the total and each overdue column with the last few months. A rising overdue figure while purchases are flat means payments are slipping.
2. The oldest column. Every item over 60 days overdue needs a reason: a dispute, a missing credit note, an invoice already paid but not matched, or a cash shortage.
3. Negative figures. A supplier with a debit balance, or a negative amount in any column, usually means a payment or credit note has not been allocated, or a supplier has been paid twice.
4. Suppliers you expected to see. If a regular supplier is missing, an invoice may not have been posted, or goods may have arrived without an invoice; see goods received not invoiced.
5. Small old items. Old balances of a few pounds are usually rounding, discounts or bank charges deducted by the supplier, and should be cleared once agreed.

Which errors does it reveal?

What you see	Likely cause	What to do
Debit balance on a supplier	Duplicate payment, unallocated credit note, payment posted to the wrong supplier	Match the items, then ask for a refund or offset against the next invoice
Same amount twice on one account	Invoice posted twice, or posted from both the invoice and the statement	Check invoice numbers and remove the duplicate before the payment run
Very old invoice on an active supplier	Paid but not matched, or disputed and forgotten	Reconcile to the supplier statement; resolve or raise a query
Balance far below the supplier’s statement	Invoices missing from the ledger	Obtain copies and post them

The most reliable check is a monthly reconciliation of the main suppliers’ statements to their ledger accounts, described in reconciling supplier statements. Duplicate invoices are cheaper to stop at the approval stage than to recover after payment; see purchase invoice approval and three way matching.

How do you use it to plan supplier payments?

Run the report by due date before each payment run. Pay what is overdue and what falls due before the next run, hold disputed items with a note of the dispute, and check the cash position before releasing anything. ACCA’s guidance on ratio analysis warns that a rising payables period can indicate cash flow difficulties, with suppliers being used as a free source of finance, and that a business should pay within the agreed credit period to avoid conflict with suppliers. Tracking the overall figure is covered in creditor days.

Paying late has a direct cost. GOV.UK explains that an agreed payment date between businesses should usually be within 60 days, and longer only if fair to both. Where no date is agreed, payment is late 30 days after the customer receives the invoice or the goods or service are delivered, if later. A supplier paid late can claim statutory interest at 8% plus the Bank of England base rate, unless the contract sets a different rate, plus a fixed recovery sum of £40, £70 or £100 depending on the size of the debt. If a supplier invoices interest, it belongs on the report like any other charge.

Why does VAT make old creditors a problem?

VAT Notice 700/18 requires a business to repay input tax it has claimed if it does not pay for a supply within 6 months of the relevant date. Where the supplier allowed time to pay, the 6 months run from the later due date; with no separate agreement the invoice date can be used as the due date. The supplier does not tell you, so HMRC says you need to monitor how long you take to pay. Repayment is made by a negative entry in the VAT allowable part of the VAT account, reducing box 4 on the return covering the date it became due. If you later pay, you reclaim the input tax in the period of payment, in proportion to what is paid.

An aged creditors report run by due date is the natural way to monitor this. Any invoice approaching 6 months overdue should be either paid, formally extended by agreement with the supplier, or flagged for the VAT adjustment. For disputes, the Notice explains that if the supplier agrees to extend the due date, the 6 months run from the extended date; if not, only the unpaid element is repayable.

What does a worked example look like?

Illustration only. A small manufacturer runs its report at 31 August, aged by due date.

Supplier	Total £	Not yet due £	1 to 30 days overdue £	31 to 60 days overdue £	Over 60 days overdue £
North Packaging	9,600	6,000	3,600	0	0
Harbour Logistics	7,200	0	0	0	7,200
Westfield Supplies	(480)	0	0	(480)	0
Kite Office	2,300	2,300	0	0	0
Total	18,620	8,300	3,600	(480)	7,200

• North Packaging is slightly late; the £3,600 goes in this week’s run.
• Harbour Logistics is one disputed invoice that fell due on 28 March. Unless the dispute is settled or the due date formally extended, the input tax on it has to be repaid on the return covering 28 September.
• Westfield Supplies shows a debit balance: a credit note was received and the original invoice was paid in full. Ask for a refund or deduct it from the next payment.
• Kite Office has two invoices of £1,150 with the same invoice number. One is a duplicate and must be removed before the run, which reduces the true balance to £1,150.

What do large companies have to report about paying suppliers?

A large company or LLP, meaning one that meets at least two of £54 million turnover, £27 million on its balance sheet and 250 employees, must publish payment practice reports at least twice a year, showing its average time to pay and the proportion of payments not made on time. In addition, the Companies (Directors’ Report) (Payment Reporting) Regulations 2025 require large companies to include in the directors’ report, for financial years beginning on or after 1 January 2026, their standard payment period, the average days taken to pay, the percentage and value of payments made within 30 days, between 31 and 60 days and after 60 days, and the share not paid within terms. The first financial year and years in which the company qualifies as medium sized are excluded. See directors’ report requirements. The figures come from the same purchase ledger data that produces the aged creditors report, so a clean ledger is a precondition.

What mistakes come up most often?

• Not agreeing the total to the nominal ledger, so the report and the balance sheet disagree.
• Ageing by invoice date for the payment run, which pays some suppliers early and others late.
• Ignoring debit balances, which are money owed back to the business.
• Posting supplier statements as well as invoices. VAT Notice 700/22 allows totals from a statement to be recorded in some cases, but notes that recording individual invoices lowers the risk of invoices being missed or entered twice.
• Letting disputes drift past the 6 month VAT point without an agreed extension.
• Paying from the report without approval. The report shows what is recorded, not what has been checked.

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Related Accountapedia entries

• Credit control and the aged debtors report
• Recording credit notes and refunds
• The VAT control account
• The general ledger and subsidiary ledgers
• Unallocated receipts and customer overpayments
• VAT on mobility aids for people aged 60 or over

Sources

• ACCA: Performance appraisal
• GOV.UK: Late commercial payments interest debt recovery
• GOV.UK: Relief from vat on bad debts notice 70018
• GOV.UK: Check when businesses pay invoices
• legislation.gov.uk: SI 2025/1152
• GOV.UK: Vat notice 70022 making tax digital for vat

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.