Accounts Receivable 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.