Definition
Accounts receivable (AR) is money owed to your business by clients for work you have already completed but not yet been paid for. Every invoice you send creates an AR balance until the client pays. It represents a current asset on your balance sheet — you earned it, you just haven't collected it yet.
Why It Matters
For contractors, AR is often the biggest number on the balance sheet. You can have a profitable P&L and still run out of cash if clients pay slowly or dispute invoices. Monitoring AR aging (how old each unpaid invoice is) is critical: the older an invoice, the harder it is to collect. Overdue AR is a cash flow emergency.
Field Example
A remodeling contractor finishes a kitchen in March and invoices $28,000. Until the client pays, that $28,000 sits in accounts receivable. If the client pays Net 30, the contractor expects payment by April. If it goes past 60 days unpaid, it becomes "overdue" AR and the contractor may need to send a formal demand or consider a lien.
Calculation / Formula (if applicable)
Outstanding AR = Sum of all unpaid invoice balances (total − amount paid)
AR Aging buckets: Current (0–30 days), 31–60 days, 61–90 days, 90+ days overdue
Software Application
Show each invoice with its balance due, due date, and aging status. Flag overdue invoices in red. Summary cards should display total outstanding and total overdue at a glance. Allow recording partial payments and track the remaining balance automatically.
Tooltip Version
Accounts receivable is money clients owe you for completed work. Track invoice aging so you know which invoices are overdue before they become a cash flow problem.
Related Objects
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