Accounts receivable is one of a series of accounting transactions dealing with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer which is to be paid within an established timeframe called credit or payment terms. It has been suggested that Accounting scholarship be merged into this article or section. ... Billing may mean: The process of sending accounts to customers for goods or services is called billing. ... A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ... Wikibooks has more about this subject: Marketing In economics and marketing, a service is the non-material equivalent of a good. ... Customers are waiting in front of a famous fashion shop for its grand opening in Hong Kong. ... An invoice is a commercial document issued by a seller to a buyer, indicating the products, quantities and agreed prices for products or services with which the Seller has already provided the Buyer. ...

An example of a common payment term is Net30, meaning payment is due in the amount of the invoice 30 days from the date of invoice. Other common payment terms include Net45 & Net60 but could in reality be for any time period agreed upon by the vendor and client.

While booking a receivable is accomplished by a simple accounting transaction the process of maintaining and collecting payments on the accounts receivable subsidiary account balances is and can be a full time preposition. Depending on the industry in practice accounts receivable payments can be received up to 10 - 15 days after the due date has been reached. These types of payment practices are sometimes developed by industry standards, corporate policy, or because of the financial condition of the client.

On a company's balance sheet, accounts receivable is the amount that customers owe a business. Sometimes called trade receivables, they are classified as current assets. To record a journal entry for a sale on account, one must debit a receivable and credit a revenue account. When the customer pays off their accounts, one debits cash and credit the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is always debit. In formal bookkeeping and accounting, a balance sheet is a statement of the book value of all of the assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a fiscal year. ... In accounting, a current asset is an asset on the balance sheet which is expected to be sold or otherwise used up in the near future, usually within one year, or one business cycle - whichever is longer. ... link title Debit is an accounting and bookkeeping term that comes from the Latin word debere which means to owe. ... Credit is a formal bookkeeping and accounting term that comes from the Latin word credere, which means to believe. The opposite of a credit is a debit. ... In bookkeeping, the trial balance is a worksheet wherein all the balances of each ledger are entered in two columns, namely debit and credit. ...

Business organizations which have become too large to perform such tasks by hand (or small ones that could but prefer not to do them by hand) will generally use accounting software on a computer to perform this task. Accounting software is computer software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll and trial balance. ... A BlueGene supercomputer cabinet. ...

Associated accounting issues include recognizing accounts receivable, valuing accounts receivable, and disposing of accounts receivable.

Accounts receivable departments use the sales ledger. A sales ledger contains the personal accounts of customers to whom the business has sold on credit. ...

Other types of accounting transactions include accounts payable, payroll, and trial balance. A financial transaction involves a change in the status of the finances of two or more businesses or individuals. ... Accounts payable is one of a series of accounting transactions covering payments to suppliers owed money for goods and services. ... Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. ... In bookkeeping, the trial balance is a worksheet wherein all the balances of each ledger are entered in two columns, namely debit and credit. ...

Since not all customer debts will be collected, businesses typically record an allowance for bad debts which is subtracted from total accounts receivable. When accounts receivable are not paid, some companies turn them over to third party collection agencies or collection attorneys who will attempt to recover the debt via negotiating payment plans, settlement offers or legal action. Outstanding advances are part of accounts receivables : If a company gets an order from its customers with advance agreed in payment terms. Since no billing is being done to claim the advances several times this area of collectible is not reflected in Accounts Receivables. Ideally, since advance payment is mutually agreed term, it is the responsibility of the accounts department to take out periodically the statement showing advance collectible and should be provided to sales & marketing for collection of advances. A collection agency is a business that pursues payments on debts owed by individuals or businesses. ... Creditors Rights is a legal term used to describe a lawyers specialized practice area focused on the collection of debts on behalf of creditors. ...

See also

• Debtors
• Factoring (finance)

In economics a debtor (or a borrower) owes money to a creditor Categories: Stub | Accounting ... Factoring is often used synonymously with accounts receivable financing. ...

External links