The prospects of collecting an account diminish greatly as each day passes. When an account is 14 days old, the client may be solvent, easy to find and be prepared to pay their account when asked to do so. However, when your account reaches 90 days, there have been 76 extra days during which the clients may have moved or closed his or her business.
In business, if you are paid at 60 days, the sales dollar has lost 10% of its value. If your profit margins are 10%, you have lost all profit from the sale. At 180 days, you have made a 23% loss on that sale. That is, you are paying your clients to use your services.
The graph at the top of this post (prepared by MAUS Business Systems) shows how the chance of collecting a debt diminishes over time.