What event proves invoice delivery and acceptance?
How are disputes separated from ordinary collection?
How quickly are receipts applied and unmatched cash investigated?
Meaning in day-to-day work
What does it mean in practice?
Accounts receivable represents valid customer amounts that have been invoiced but not yet collected. Managing AR means more than listing balances: it connects credit decisions, invoice delivery, due dates, cash application, disputes, collection activity, and expected cash.
Practical example
A customer receives an invoice due in 30 days. The balance appears in the aging report, the collection owner follows up before and after the due date, and the payment is matched to the correct invoice when received.
From start to close
How does the workflow operate?
1
Set customer credit limits, terms, billing details, and collection ownership.
2
Issue and deliver an accurate invoice with a clear due date.
3
Monitor aging, promises to pay, disputes, and unapplied cash.
4
Record and apply receipts to the correct customer and document.
5
Approve credits or write-offs and reconcile the subledger to the general ledger.
Recommended controls
What protects workflow quality?
Credit limits and approval for overrides
Unique invoice numbers and proof of delivery
Daily cash application and unapplied-receipt review
Controlled credit notes, write-offs, and customer refunds
Common mistakes
What should teams avoid?
Treating every overdue balance as a collection problem before checking disputes
Posting one receipt against the wrong customer or invoice
Reporting total receivables without aging, concentration, or collectability