The aging, with probabilities
Every reserve is a guess about which overdue money never arrives. This one guesses in the open: the aging’s own buckets, rates stated on the page, 117,730.00 at 31 May, and a recomputation every time collections changes the facts.
◆ The reserve, computedtwo buckets, two rates, one number.
| Bucket | Open amount | Rate | Reserved |
|---|---|---|---|
| 31 to 60 days past due | 386,300.00 | 10% | 38,630.00 |
| Over 60 days past due | 158,200.00 | 50% | 79,100.00 |
| Reserve at 31 May | 544,500.00 | 117,730.00 |
The buckets are the aging’s own rows, the rates are policy stated on the page, and every cell is one multiplication. When the worklist clears an over-sixty invoice, the reserve falls by half that invoice the same night, which is how a reserve should breathe. Sample values are illustrative, never client data.
◆ The owned answerpolicy as data, the reserve as a query.
Rates live in a small policy table with effective dates; the reserve is buckets times rates over the customer star’s stored aging. History keeps every month’s computation, so the auditor’s question is answered by the table that computed it.
- AR
- Accounts receivable, the money customers owe.
- bad-debt reserve
- The expected-loss provision on receivables.
- rated bucket
- A past-due bucket times its stated rate.
- policy table
- The rates, with effective dates; the auditable part.
- breathing reserve
- One that moves the night the aging moves.