Chapter 5

How to manage accounts receivable

Many businesses issue invoices, and those invoices need to be tracked. Learn how to manage accounts receivable.

A bookkeeper at a desk with a coffee cup and a laptop

What is accounts receivable?

Accounts receivable involves invoicing customers and tracking payment of those invoices. It often requires you to follow up on overdue payments.

Why does it matter?

You’re not a charity. You need to get paid. Fail to manage accounts receivable correctly and your business will rapidly run out of money.

How to manage accounts receivable

  • Decide how long customers will have to pay your invoices and commit it to writing
  • Share and agree on those payment terms before doing business with anyone new
  • Create and send invoices as soon as a sale is agreed (include the agreed payment terms on the invoice)
  • Watch your bank account for payment and follow up immediately if they miss the due date

You can get more tips on accounts receivable in our Invoicing Guide.

Modern accounts receivable

Flow chart showing how software manages accounts receivable

Invoices can be created quickly on apps and sent with immediate payment options like credit and debit cards. Smart software can even check your bank for payments and keep a watchlist of unpaid invoices for you.

Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

How to do bookkeeping

Bookkeeping includes everything from basic data entry to tax prep. Let’s look at the core jobs and see how they’re done.

Download the guide on how to do bookkeeping

Learn about the eight core bookkeeping jobs, from data entry to reporting and tax prep. Fill out the form to receive the guide as a PDF.

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