What does 'aging' accounts receivable refer to?

'Aging' accounts receivable refers to the process of categorizing outstanding invoices based on how long they have been due for payment. This involves organizing invoices into different time frames, such as 0–30 days, 31–60 days, 61–90 days, and beyond. The aging report provides valuable insights into the health of the company's receivables, helping businesses identify overdue accounts and effectively manage their cash flow.

By using aging analysis, companies can prioritize collections efforts on accounts that are overdue and at greater risk of default. This categorization not only helps in creating a clearer picture of the outstanding debts but also assists in assessing the effectiveness of the company's credit policy and payment terms.

The other options do not accurately describe the concept of aging accounts receivable. For instance, while categorizing invoices by customer name and identifying high-value customers can be useful in managing customer relationships, they do not address the duration of payment. Similarly, forecasting future sales is a broader financial analysis that does not specifically involve the aging of accounts receivable.