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What is Accounts Receivable?

Accounts Receivable

Accounts receivables generally refers to the amount owed to a company by its’ clients and creditors. Sales are often recorded in the form of an invoice both paper and electronic. This invoice includes the total amount of invoice, shipping costs (if applicable), taxes, payment terms, invoice number and original order number and description of shipped goods. 

Payment terms are extension dates given to the client based on credit terms set by the client and the sales department when the original order is made. This allows the client ample time to sell the goods and pay the invoice. Payment terms generally speaking are 30 or 60 days depending on the agreement. Many companies offer discounts if the invoice is paid before the payment terms. 

The accounts receivable department works closely with the bookkeeper to create daily and monthly sales reports. Invoices are considered assets and are used to calculated the overall worth of the company by the controller. The accounts receivable department is responsible for generating the aged accounts reports and following up on collecting overdue accounts. 

Accounts Receivable is an important part of the company because it is the primary resource for all the sales departments. It creates invoices, orders, shipping labels, picking slips and oversees that all goods are shipped in a timely fashion. Essentially, it is the liaison between the sales, accounting and shipping departments. For help with all your accounting do not hesitate to contact one of our bookkeeping outsourcing companies today!