Glossary · Sales and receivables
Accounts receivable (A/R)
Accounts receivable is the money customers owe a business for goods or services already delivered and invoiced but not yet paid. It is a current asset on the balance sheet. The balance goes up when you send an invoice and down when the customer pays or the amount is credited or written off.
Glossary / Accounts receivable · Also called receivables, trade receivables
How it works
Receivables exist because most businesses do not get paid on the spot. You do the work, send an invoice with terms such as net 30, and wait. Until the money arrives, it sits in accounts receivable.
A/R is an asset, but only a useful one if it turns into cash. That is why owners watch the aging of their receivables: an invoice that is 10 days old is normal, one that is 120 days old may never be paid. Under cash-basis accounting there is no A/R on the books, because income is recorded only when the payment arrives.
Worked example: Invoicing and getting paid
A landscaping company invoices a property manager $2,400 for spring cleanup on April 3, terms net 30. It records a debit to accounts receivable and a credit to income for $2,400. The customer pays $1,400 on April 28 and the rest on May 20.
After the first payment, A/R for that customer is $1,000. After the second, it is zero. The income was recorded in April, when the work was invoiced, even though half the cash arrived in May.
| Date | Event | A/R balance |
|---|---|---|
| Apr 3 | Invoice $2,400 | $2,400 |
| Apr 28 | Payment $1,400 | $1,000 |
| May 20 | Payment $1,000 | $0 |
In AcboBooks
Every invoice posts to the Accounts Receivable account in the starter chart, and Receive Payment clears it. The A/R Aging report buckets what each customer owes into current, 1-30, 31-60, 61-90 and over 90 days, and a Collections report lists overdue invoices with each customer's phone and email.
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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