Write the AR Aging Narrative Your Lender Wants to Read
An aging report is just numbers; the narrative behind it is what keeps borrowing bases open.
When examiners flip through your AR aging, they’re really asking three questions: What changed, why did it change, and how fast can you fix it? Answer those questions in a standing narrative and your next renewal gets easier.
1. Pull data from the same source every time
Use the exact AR export you include in your borrowing base packet. That way, no one argues about reconciling numbers.
- Sign-off from Accounting on the GL tie-out.
- Adjustments for credits and rebates listed separately.
- Breakdown by customer, term, and region.
2. Explain movements with operational context
For each bucket (current, 1–30, 31–60, 61–90, 90+ days), note the primary driver:
- Sales pushes (e.g., quarter-end discounts).
- Billing issues (e.g., EDI errors, disputed invoices).
- Customer health (e.g., seasonal slowdowns, credit holds).
Pair each driver with a timeline for resolution.
3. Tie the aging narrative to liquidity
Borrowing bases rise and fall with eligibility. Use a simple table to show how aging shifts affect cash:
| Bucket | Change vs. Prior Week | Eligible Impact | Action |
|---|---|---|---|
| 31–60 | +4% | -\$420K | Collections sprint + discount offers |
| 61–90 | -2% | +\$180K | Resolved dispute with top retail client |
This shows lenders you connect aging data to cash decisions.
4. Document mitigation playbooks
List the playbooks you’ll trigger when buckets expand:
- Credit hold thresholds.
- Escalation scripts for sales + finance.
- Alternative financing (factoring, short-term draws) while you work down balances.
Include owners and deadlines so examiners see accountability.
5. Archive narratives for exam day
Store every weekly narrative in a shared folder. When examiners ask why your 31–60 bucket spiked last summer, you can show the exact memo, action, and result.
FAQ: AR aging narratives
- How long should the narrative be?
- Two pages max. Focus on movements, causes, and actions.
- Who writes it?
- Collections owns the draft, Accounting verifies numbers, and Treasury ties it to cash.
- Do we send it every week?
- Yes—attach it to your Monday lender update so there are no surprises at renewal.