Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
Accounts receivable represents your unpaid invoices - the revenue you have earned but not yet collected. For most businesses, AR is one of the largest current assets on the balance sheet. Effective AR management means sending invoices promptly, following up on overdue payments and maintaining a clear picture of your outstanding receivables at all times. The AR ageing report is one of the most important reports in bookkeeping - it shows you which invoices are current, which are 30 days overdue, 60 days overdue and beyond. In Xero, accounts receivable is managed through the Invoicing module. SortBooks enhances AR management by automatically matching incoming bank payments to outstanding invoices, flagging overdue accounts and providing real-time visibility into your receivables position. Good AR management directly impacts your cash flow - the faster you collect, the healthier your cash position.
SortBooks automates the bookkeeping processes related to accounts receivable by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing accounts receivable, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
Accounts payable (AP) represents the money your business owes to suppliers and vendors for goods or services received but not yet paid for. It is a current liability on your balance sheet.
An invoice is a document sent to a customer requesting payment for goods or services provided. It includes details of the transaction, payment terms and the amount due.
Cash flow is the movement of money in and out of your business. Positive cash flow means more money coming in than going out. It is often considered more important than profit for business survival.
Bad debt is money owed to your business that you determine is uncollectable. Writing off bad debt removes the amount from accounts receivable and records it as an expense.
An ageing report categorises accounts receivable or accounts payable by the length of time invoices have been outstanding, typically in 30-day buckets (current, 30, 60, 90+ days).
SortBooks handles all the complexity automatically. Just connect Xero and let AI manage your books.