What is accounts receivable?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
Accounts receivable is the money customers owe a business for goods or services it has delivered and invoiced but has not yet been paid for. Each unpaid invoice stays in accounts receivable until the customer pays, it is credited or it is written off, and the total is shown as a current asset on the balance sheet.
Tracking accounts receivable shows which invoices are overdue, so the business can follow up with customers before late payments strain its cash flow.
A list of unpaid invoices sorted by how long they have been outstanding, often called aged receivables, makes the oldest debts easy to see. An invoice that is paid but not matched to the customer's payment can still look overdue, so payments are matched as they arrive.
In Australia
business.gov.au lists end-of-year records, including a list of debtors (the people and businesses that owe you money), among the records a business needs to keep.
Its guide to managing cash flow suggests sending an invoice as soon as you make a sale, setting clear payment terms, such as payment up front or within 30 days, and following up customers who haven't paid.
Common mistakes
- Sending invoices in batches days after the work is done, which pushes back when you are paid.
- Recording a customer's payment as new income instead of matching it to their invoice, which counts the sale twice.
Related terms
Sources
- Record keeping
business.gov.au, Australian Government. Current at 15 October 2026, released 7 November 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Guide to managing cash flow
business.gov.au, Australian Government. Current at 15 October 2026, released 22 December 2025. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.