Accounts Receivable
Accounts receivable is the total of every invoice you have sent that is still unpaid. It is the money owed to you across all clients. Knowing this one number helps you chase on a schedule.
What it means
Every unpaid invoice is a receivable until one of three things happens. Someone pays it, you write it off as bad debt, or a credit note cancels it. Add them all up and you get one number. It answers a question worth asking each week: how much money is owed to me, and by whom?
The number alone does not tell the whole story. A $3,000 receivable that is three days old is nothing to worry about. A $300 receivable that is four months old is a real problem. Aged receivables breaks that out. The total is still the place to start.
You sent invoices to five clients this month, totalling $4,200. None is paid yet. Your accounts receivable is $4,200. Check that number before you decide whether you can afford a new tool this week.
Checking accounts receivable only when cash feels tight, not on a fixed weekly rhythm. By the time cash feels tight, several invoices are already well overdue.
See also
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