What is accounts receivable?
Accounts receivable is money your customers owe you for goods delivered or services performed that you have not yet been paid for. It is an asset of your business, but it is not cash in the till.
Why it counts as an asset
Because it is an established financial claim you hold against someone else. It appears under current assets on the balance sheet, since you expect to collect within a year.
The practical danger
Many small businesses fail while profitable on paper, because that profit is locked up in uncollected debt. The longer a debt ages, the less likely it is to be collected.
A simple tracking rule
Group your debts by age: under 30 days, 30–60, 60–90, and over 90. Focus collection effort on the oldest bracket first.
Frequently Asked Questions
A credit sale is recorded as revenue on delivery, so it does feed profit. But it is not cash until you collect it, which is why a business can be profitable and short of liquidity at the same time.
If collection becomes impossible, the amount is treated as a bad debt and written off, which reduces profit by the same amount. Tracking debt ageing early is far cheaper than dealing with it late.
Keep a separate running balance and due date per customer. Qayd tracks this automatically with each transaction you record, and shows you who owes what and for how long.
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