Accounts receivable
Work you have invoiced but not been paid for — revenue on the books that cannot pay a salary yet.
Accounts receivable is the money customers owe you for work already invoiced. It sits on the books as revenue and in the bank as nothing, and the distance between those two facts is where small businesses die.
What makes it dangerous is that it grows silently with success. Every new client adds a receivable before it adds cash, so the busiest quarter is the one most likely to feel broke. The useful habit is an ageing list — every unpaid invoice sorted by how old it is — read once a week, not once a quarter. Anything past 60 days is not slow, it is a decision somebody made not to tell you about.
Chasing is a process, not a mood. A dated schedule that goes reminder, phone call, work-stops notice, at fixed intervals, collects far more than an apologetic email sent whenever you remember. The apology in particular costs money: you are the supplier, and the invoice is the agreement, not a request.
Worked: $60,000 of receivables on $30,000 of monthly revenue means 60 days outstanding. Getting the average to 30 days releases $30,000 of cash once, permanently — the same effect as a month of free revenue, with no selling and no delivery attached.
Also known as
- AR
- receivables
- debtors
Relevant for
- Creators
- Brand deals pay on the client's schedule, not yours; put payment terms in the deal and an ageing list in your week or you are lending to companies larger than you.
- Business owners
- Set the day the work stops when an invoice ages past your stated terms, and say it in the contract — a policy is collectable in a way that a reminder never is.