Two agencies both report three million in arrears. In the first, it is three hundred tenants who are a few days late. In the second, it is fifteen tenants who have paid nothing for five months. The total is identical and the situations have nothing in common.
An ageing report splits the balance into bands, typically current, 1–30 days, 31–60, 61–90 and over 90, so the shape of the debt is visible and not just its size.
Why the shape matters more than the total
Recoverability falls off a cliff with time. A tenant one month behind is usually a tenant who will pay. The same tenant five months behind is usually a tenant who is leaving, and the money is usually gone.
The entire value of the report is that it surfaces the first case while it is still the first case. A single total cannot do that, because a portfolio drifting from healthy to distressed can hold the same total throughout while every account inside it moves the wrong way.
Reading a real one
| Band | Balance | Accounts | What it means | | --- | --- | --- | --- | | Current | 4,200,000 | 210 | Billed, not yet due. Not arrears. | | 1–30 | 680,000 | 34 | Mostly forgetfulness. Recoverable. | | 31–60 | 240,000 | 9 | Needs a conversation, not a reminder. | | 61–90 | 310,000 | 5 | A plan, or a decision. | | Over 90 | 890,000 | 6 | Mostly gone. Decide, and stop carrying it. |
Six accounts hold KES 890,000. Thirty-four accounts hold KES 680,000. Those two rows need completely different people doing completely different things, and a single "arrears: 2.12m" figure makes them look like one problem.
Making it drive action
The report is worth nothing as a monthly artefact. It is worth a great deal as a weekly worklist, where each band has a defined response:
- 1–30: automated reminder with the balance and the payment reference.
- 31–60: a named person makes a call and asks what is stopping payment.
- 61–90: a written plan with dates, or formal notice under the tenancy.
- Over 90: a decision, taken by a named person and recorded.
The test of whether it is working is direction of travel. In a healthy book accounts move down the bands week on week. In an unhealthy one they age quietly upward and nobody notices until a band that used to hold two accounts holds eleven.
The discipline that makes it reliable
Every payment has to be applied to specific charges. See payment allocation.
A balance assembled from unallocated receipts cannot be aged at all, because nobody can say which month the money settled. An agency that receives KES 20,000 against an account owing KES 14,000 of old water and KES 18,000 of current rent has to decide what that payment cleared before it can say anything about age. If that decision is never recorded, the ageing report is a guess with a table around it.
The same problem runs the other way with unallocated payments: money sitting unidentified inflates the arrears figure, because it has not been credited to anyone.
What goes wrong
Current is counted as arrears. Charges billed and not yet due are not arrears, and including them makes every report look alarming and therefore gets all of them ignored.
Credits are netted off. A tenant in credit does not offset a tenant in arrears. Netting them hides both.
It is produced monthly. By the time a monthly report shows an account at 31 days, it has been recoverable and untouched for a month. Weekly is the interval at which the report changes outcomes rather than describing them.