Getting paid: receivables and aging
What you'll learn
Read an aging report, price what waiting costs you, and set payment terms like the lender you've accidentally become.
The moment you send an invoice with "net 30" on it, you become a lender. You've delivered the full job — the money is now a loan to your client, interest-free, unsecured, and extended without a credit check. Receivables are simply the list of those loans, and aging is how you read it.
The aging report
Aging sorts every unpaid invoice by how long it's been waiting:
| Bucket | Outstanding | Read as |
|---|---|---|
| 0–30 days | $6,000 | normal — money in transit |
| 31–60 days | $2,500 | late — someone owns a follow-up |
| 61–90 days | $1,200 | a problem with a name on it |
| 90+ days | $800 | maybe never — act now |
| Total | $10,500 | your money, elsewhere |
Two habits turn this from wallpaper into a tool. First: the bottom two buckets are tasks, not information — every dollar past 60 days needs an owner and a next step. Second: watch the DRIFT between months. A total that's stable but sliding downward into older buckets is a business slowly becoming its clients' bank.
What waiting actually costs
That $10,500 isn't just annoying — it's expensive, three ways:
- It has a price. If a credit line costs you 10% a year, financing $10,500 of clients' invoices costs roughly $88 a month — a real line item, paid by you, invisible on any estimate.
- It has risk. Collection odds fall as invoices age; the 90+ bucket is routinely written off in whole or in part.
- It has your time. Chasing is unbillable hours — remember the funnel from lesson 3.
Policies beat chasing
The receivables you never create are the cheapest ones:
- Deposits and progress billing (last lesson) keep most of the money out of the loan entirely.
- Short terms, stated on the document: "due on receipt" or net 15. Net 30 is a habit inherited from businesses with a finance department.
- Make paying frictionless — an invoice with a payment link gets paid faster than one that requires finding a checkbook.
- A late clause you actually apply (e.g., 1.5%/month where lawful) — less for the revenue than to make "pay this one first" rational.
The through-line of module 3: profit is decided when you price; cash is decided when you write the terms. Both live on the same page of the estimate.
Check your understanding
Question 1 of 2
Sending a net-30 invoice after finishing the work makes you, financially speaking: