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What is Accounts receivable?
Accounts receivable (AR) is the money customers owe you — sent invoices not yet paid. It's an asset on your books, but it's not cash until it arrives, which is why profitable businesses still die: the AR looked healthy while the bank account hit zero.
In practice
A wholesaler's AR ledger shows $85,000 outstanding across 12 invoices. Two are 60 days overdue — that's $22,000 of 'assets' that may never arrive.
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Create an invoice — freeFrequently asked questions
How do I track accounts receivable?
An aging report: invoices grouped by 0–30, 31–60, 61–90, and 90+ days overdue. Review it weekly — anything sliding right needs a call.
What's a healthy level of receivables?
Roughly one month of revenue for net-30 businesses. Much more means you're financing your clients; much less means you're not selling enough on terms.
When does a receivable become bad debt?
When collection is no longer realistic — typically after dunning and a collections attempt fail, often around 90–180 days. Then write it off.