Accounts Receivable

With so many customers and orders, companies can quickly lose track of their outstanding receivables.Accounts receivable, a subset of financial accounting, helps organize and manage a company’s outstanding receivables from its debtors. Accounts receivable can also follow up to ensure these receivables are paid.

To simplify organization, accounts receivable clerks set up individual accounts receivable accounts for corporate clients. These accounts are used to document all outstanding invoices as well as payments received from the respective client. This provides the company with a structured overview of outstanding receivables and invoices received, giving it a clearer picture of payment behavior.

What are the responsibilities of accounts receivable?

Accounts receivable deals with the posting and management of accounts receivable. Its responsibilities include, among other things, receivables management, which involves checking accounts receivable for outstanding balances. If invoices remain unpaid, the respective receivable is entered into a collection process, and payment reminders and collection notices are sent out.

The information on outstanding invoices collected by accounts receivable provides important data for corporate planning. Information on payment behavior is relevant for areas such as marketing and account management, among others. Information from accounts receivable is often used to create a scoring system that allows for a better assessment of the risk of non-payment.

‍What is the difference between accounts payable and accounts receivable?

‍Accounts payable is the counterpart to accounts receivable. In accounts payable, a company that owes money to suppliers or service providers for goods or services is the debtor. Accounts payable therefore deals with a company’s liabilities. Since creditors are external service providers, accounts payable is closely linked to a company’s procurement process.