--- title: "Accounts Receivable Basics: Aging & Collections | MCC" description: "Read an aging report, set terms and follow up on late invoices. Worked $30,000 aging example." url: "https://mcc-solutionsnj.com/bookkeeping/guides/accounts-receivable-management-basics" --- Bookkeeping guide · Updated October 12, 2026 # Accounts Receivable Basics: Track What You're Owed Accounts receivable is the money customers owe you for work already done. It is an asset on paper, but it only helps the business once it turns into cash. Managing it takes a few simple tools and a steady routine. By [Matthew Coleman](/about), MCC Solutions **Quick answer.** Accounts receivable is the money customers owe you for work already done. Each unpaid invoice is a line in receivables, and the customer detail shows who owes what and since when. It only helps the business once it turns into cash. Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [Void vs delete a transaction](/bookkeeping/guides/voiding-vs-deleting-transactions) · [NJ 1099 contractor rule (ABC test)](/bookkeeping/guides/nj-independent-contractor-rule-abc-test-2026) · [Trial balance explained](/bookkeeping/guides/trial-balance-explained) **Free tools:** [Free invoice template](/bookkeeping/free-invoice-generator) · [How many sales do I need to break even?](/bookkeeping/break-even-calculator) [Measure how fast customers pay](/bookkeeping/days-sales-outstanding-calculator) with the days sales outstanding calculator. [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) ## What lives in receivables Each unpaid invoice is a line in receivables. The general ledger holds the total, and the customer detail shows who owes what and since when. If you take payment at the time of sale, you may have no receivables at all, which is simple but not possible for every business. Credit memos, partial payments and unapplied deposits also sit here. A payment received but not matched to an invoice makes the customer look like they owe money when they do not, so match payments promptly. ## The aging report is your main tool An aging report groups unpaid invoices by how overdue they are: current, a month late, two months late and so on. Run it weekly. The oldest buckets deserve attention first, because the chance of collecting drops as time passes. Look at it by customer too. One client carrying most of the overdue balance is a concentration risk. If they stop paying, the business feels it quickly. ## Set terms before the work starts Receivables problems often begin with vague terms. Put the due date, accepted payment methods and any late fee on the quote, contract and invoice. Common terms are due on receipt or a set number of days after the invoice date. Choose what fits your industry and your cash needs. For new customers or large jobs, consider a deposit or milestone billing. It reduces your exposure and sorts out serious buyers early. ## Credit limits and customer risk If you extend credit, decide how much you are willing to be owed by any one customer. Check references for large accounts. Stop work or shipments when a customer is well past due, and say so in the contract so it is not a surprise. Track a simple note on each customer: how they usually pay, who handles bills and the right contact. That context is useful when you follow up. ## A weekly receivables routine Pick a day. Match any new payments, send invoices that are ready, review the aging report, and contact customers at the next overdue stage. Record every contact in your system or a note. Compare receivables with sales over time. If sales grow but receivables grow faster, collections are slipping. Use the trend, not only the total. A bookkeeper can prepare the aging and reminders so your time goes to relationships, not paperwork. ## Reading the numbers: days sales outstanding A simple measure of collection speed is the average number of days it takes to get paid. Divide receivables by credit sales for the period, then multiply by the days in the period. If the figure creeps up over several months, customers are paying later or your follow-up has slowed. Compare it to your stated terms. If you ask for payment in thirty days and the figure sits near fifty, your real terms are longer than your written ones. That gap is cash you are lending interest-free, and it may be worth a conversation about tighter terms or deposits. ## Worked example with numbers An aging report shows $30,000 receivable: $18,000 current, $7,000 at 1-30 days late, $3,500 at 31-60 and $1,500 over 60. That is 5% over 60 days. Start with the oldest: call the $1,500 customer this week and send friendly reminders to the $3,500. Terms set before work starts, such as a deposit on larger jobs, keep the over-60 bucket small. ## Mistakes that cost money Waiting too long to follow up. Extending credit to customers with no history. Not applying payments, which makes customers look late. ## Check your work The aging report total must equal accounts receivable on the balance sheet. ## Common questions **What is a healthy amount of receivables?** It depends on your terms and industry. Compare the number to your normal collection time and watch for the trend rather than one figure. **Should I charge late fees?** Only if they are stated in advance and allowed under the law that applies to you. Ask an attorney if unsure. **What is the difference between aging by invoice date and due date?** Invoice-date aging counts days since you billed. Due-date aging counts days past the due date. Due-date aging shows what is truly late. This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. Bookkeeping →](/bookkeeping/) [### QuickBooks Online Monthly bookkeeping, cleanup and reconciliation in QuickBooks Online for New Jersey small businesses. Your account stays in your name. QuickBooks →](/bookkeeping/software/quickbooks-online)[### FreshBooks Bookkeeping, invoice clean-up and reconciliation in FreshBooks for New Jersey freelancers and service businesses. FreshBooks →](/bookkeeping/software/freshbooks) More guides - [Accounts Payable Process for Small Businesses](/bookkeeping/guides/accounts-payable-process-for-small-business) - [Invoicing Practices That Get You Paid Faster](/bookkeeping/guides/invoicing-practices-that-get-you-paid-faster) - [How to Collect Late Payments From Customers](/bookkeeping/guides/how-to-collect-late-customer-payments) - [Expense Categorization Rules of Thumb](/bookkeeping/guides/expense-categorization-rules-of-thumb) Free tool - [Bookkeeping health check](/bookkeeping/health-check) [All guides](/bookkeeping/guides) Reach small business owners, freelancers and bookkeepers who read this guide: [advertise here](/advertise#bookkeeping). 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It does not do payroll or sales tax filing. The free download records up to 60 entries. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) [Download it free](/tools/pro/trial/mccBooks) [Compare the three apps](/software) ## Rather have us keep the books? Ask for a quote. [Get a Quote](/bookkeeping/#interest)[Call (908) 444-6373](tel:+19084446373)