Accounts receivable explained
When you deliver work or goods and send an invoice with payment terms, the customer owes you money. Until they pay, that amount is an account receivable: an asset on your balance sheet, because it’s cash you expect to collect.
Receivables go up when you invoice and down when customers pay, take a credit or have a balance written off. Watching them matters because profit on paper only becomes cash once it’s collected. A business can be profitable and still run short of cash if customers pay slowly.
An aging report groups what’s open by how late it is, for example current, 1–30 days past due, 31–60, 61–90 and over 90. The older a receivable gets, the less likely it is to be paid, so the aging tells you whom to call first.
Example: one invoice through to payment
On March 1 a studio invoices a client $2,400, due in 30 days. The client pays $1,000 on March 20 and the rest on April 22.
| Date | Event | Receivable balance |
|---|---|---|
| Mar 1 | Invoice sent, due Mar 31 | $2,400 |
| Mar 20 | Partial payment of $1,000 | $1,400 |
| Apr 15 | Aging: 15 days past due, in 1–30 | $1,400 |
| Apr 22 | Final payment of $1,400 | $0 |
On a cash-basis report, the $2,400 would count as income only as the two payments arrive.
Where you’ll see it in fiscal50
Every invoice you save in fiscal50 debits Accounts Receivable and credits revenue and sales tax payable. Receiving a payment applies it to the invoices you tick; if a customer pays more, the extra stays as a credit they can use against future invoices.
The A/R Aging report shows what is open today by Current, 1–30, 31–60, 61–90 and Over 90, and the customer statement lists each customer’s activity and balance.