Definition: The money due from all customers for merchandise or services
delivered on credit. The total figure would be shown on the balance
sheet as an asset
If you plan to sell goods or services on account in your
business, you'll need a method of tracking who owes you how much
and when it's due.
Here are five key components of a good accounts receivable
system:
1. Verify accounts receivable balances. Use source documents
such as invoices to keep balances accurate.
2. Send accurate and timely invoices. You won't get paid
until you send an accurate invoice.
3. Generate accounts receivable reports. This will help
determine which customers are past due and help you track credit
limits.
4. Post the paid invoices. It's important to track who pays
you when.
5. Match your records. Your customer records totals must
match your general ledger and sub ledgers.