With respect to a financial asset, it is a situation that results from failure of a counterparty (e.g., an issuer, a debtor, etc.) to make a payment that has fallen due as per contractual terms. Past-due accounts are typically classified according to the length of period past due.

For such accounts, an allowance for outstanding receivables is created using a method known as aging receivables. Days past due are grouped in terms of the number of days passed since a receivable fallen due: that is, days past due: current, 1-30, 31-60, 61-90, and over 90. Each bracket is assigned an uncollectibility percentage that will be the basis for calculation of corresponding provisions.