The most important points at a glance:
- Accounts receivable are outstanding claims against customers and directly impact liquidity.
- The distinction between accounts receivable and accounts payable is central to accounting and financial management.
- Accounts receivable accounting ensures order, transparency and accurate financial statements.
- Accounts receivable management actively controls incoming payments and reduces default risks.
- Bad debt losses and provisions for doubtful accounts are key levers in dealing with payment defaults.
What are accounts receivable?
Accounts receivable are customers or business partners who owe money to a company. They arise from outstanding invoices and are recognized as receivables in current assets.
In practice, accounts receivable arise whenever there is a time gap between the provision of a service and the receipt of payment. This is common in business transactions and results from agreed payment terms or billing cycles.
From an accounting perspective, accounts receivable are recorded under trade accounts receivable. They are part of current assets, as they are expected to be settled in the short term.
As long as a receivable is outstanding, the corresponding amount is not available to the company as liquid funds. Outstanding receivables therefore tie up capital and are a normal but closely monitored component of a company’s financial situation.
“Accounts receivable are not an exception, but part of day-to-day operations. What matters is clear and traceable recording of outstanding receivables,” says Urs Rindlisbacher.
What is the difference between accounts receivable and accounts payable?
Accounts receivable are customers with unpaid invoices; accounts payable are suppliers or service providers to whom the company owes money.
The difference between accounts receivable and accounts payable arises from the payment direction. While customers with accounts receivable owe money to the company, the company owes payments to accounts payable for goods or services already received.
In accounting, the two positions are kept strictly separate, as they have different effects on assets and financial position. This distinction is a basic prerequisite for proper accounting and transparent financial statements.
Comparison: accounts receivable and accounts payable in accounting
| Criterion | Accounts receivable | Accounts payable |
| Payment direction | Customer owes money to the company | Company owes money to the supplier |
| Origin | Sale of goods or services | Purchase of goods or services |
| Accounting classification | Trade accounts receivable | Trade accounts payable |
| Balance sheet side | Assets side (current assets) | Liabilities side (short-term liabilities) |
| Typical risk | Payment default or delayed payment | Liquidity burden at maturity |
This clear separation makes it possible to present receivables and obligations in a transparent and traceable way at any time. It forms the basis for reliable analyses, financial statements and internal controls.
What is accounts receivable accounting?
Accounts receivable accounting records, manages and monitors all outstanding receivables from customers and ensures their correct posting.
Accounts receivable accounting is part of financial accounting and deals with all business transactions relating to customer receivables. This includes in particular recording invoices, posting incoming payments and providing an ongoing overview of outstanding items.
The aim of accounts receivable accounting is to show transparently at all times which amounts are still owed by customers. This transparency is a prerequisite for accurate financial statements and a reliable presentation of the asset situation.
In practice, accounts receivable accounting forms the basis for internal analyses and external requirements, for example in the context of annual financial statements, audits or tax returns.
“Well-maintained accounts receivable accounting builds trust in the numbers and is the basis for reliable financial statements” – Urs Rindlisbacher
What are the tasks of accounts receivable accounting?
The tasks of accounts receivable accounting can be divided into several core areas:
- Recording receivables
Posting issued invoices with date, amount and due date. - Monitoring outstanding items
Ongoing control of which invoices have been paid and which are still outstanding. - Posting incoming payments
Reconciling bank receipts with outstanding receivables. - Reconciliations and control
Ensuring that receivable balances are correct and traceable.
These tasks ensure that receivables are reported completely, accurately and in the correct period.
What is a receivable account number?
The receivable account number is a unique identification number under which a customer is managed in the accounting system. It serves to clearly assign invoices, payments and outstanding items.
Typical functions of the receivable account number are:
- unique identification of a customer in the accounting system
- avoiding mix-ups in the case of customers with the same name
- basis for analyses, open-item lists and reconciliations
The receivable account number is an organizational tool and differs from a customer number in sales or CRM systems.
What is an open-item list?
An open-item list (OP list) shows all customer invoices that have not yet been paid as of a specific reporting date. It is a central working tool in accounts receivable accounting.
Typical contents of an open-item list are:
- invoice number and date
- invoice due date
- outstanding amount
- assigned receivable account
The open-item list provides an overview of outstanding payments and forms the basis for further accounting analyses.
When do you need accounts receivable management?
Accounts receivable management becomes necessary when outstanding receivables must be actively managed in order to keep incoming payments predictable and to limit default risks.
Accounts receivable management starts where the mere posting of receivables is no longer sufficient. This is often the case when outstanding invoices are no longer reliably paid within the agreed terms or when the volume of receivables noticeably impacts liquidity.
In practice, this need typically arises in the following situations:
- the company is growing and issuing more invoices
- payment terms are extended or are increasingly exceeded
- individual customers repeatedly pay late
The goal is to make incoming payments more predictable and to identify risks at an early stage without unnecessarily burdening day-to-day operations or customer relationships.
“Accounts receivable management becomes relevant when receivables not only need to be recorded, but actively managed,” explains Urs Rindlisbacher.
How does effective accounts receivable management work?
Effective accounts receivable management follows clearly defined processes. It begins with transparent invoicing and only ends with full payment.
Key elements are:
- clear payment terms and due dates
- ongoing monitoring of outstanding items
- prompt resolution of queries or discrepancies
If invoices remain unpaid despite these steps, a structured escalation follows along defined processes. This ensures that receivables are processed in a traceable manner and not left to chance.
How accounts receivable management protects your liquidity
Effective accounts receivable management has a direct impact on liquidity. Outstanding receivables tie up capital as long as no payment is received.
Through systematic monitoring, incoming payments can be accelerated and fluctuations better balanced. At the same time, the risk that receivables are recognized too late or have to be written off is reduced. Accounts receivable management thus supports stable management of current assets.
How do you deal with bad debt losses?
Bad debt losses arise when outstanding receivables can no longer be realized in full or in part and must be recognized as an expense in the accounts.
Bad debt losses concern receivables for which it is certain or foreseeable that payment will no longer be received. Reasons may include a customer’s inability to pay, bankruptcy or unsuccessful enforcement proceedings. In such cases, the company loses its claim to the outstanding amount in whole or in part.
From an accounting perspective, bad debt losses have a direct impact on the income statement. They reduce profit and change the asset situation, as receivables must be written off. It is therefore important to distinguish between threatened payment defaults and definitive losses and to treat them correctly.
For CFOs and fiduciaries, dealing with bad debt losses is primarily a matter of proper valuation and correct timing in the annual financial statements.
What measures are available for outstanding receivables?
Before a bad debt loss occurs, there are usually various options for actively handling outstanding receivables. The goal is still to obtain payment or to clarify the situation at an early stage.
Typical measures are:
- structured payment reminders and dunning letters
- direct clarification of queries or complaints
- agreement on partial payments or new payment terms
If these steps are unsuccessful, legal action may follow. In the Swiss context, this particularly includes debt collection proceedings. Which steps make sense depends on the individual case, the amount of the receivable and the customer relationship.
What is a provision for doubtful accounts (Delcredere)?
“Delkredere” refers to a valuation allowance on receivables that a company uses to provisionally account for expected payment defaults. It is used when the payment is uncertain, but the loss has not yet been definitively established.
Unlike a bad debt loss, a provision for doubtful accounts is not a definitive write-off, but a valuation adjustment. The receivables remain in place but are reduced by the estimated default risk.
In Switzerland, the tax authorities accept provisions for doubtful accounts in a lump-sum form, although the permissible rates may vary from canton to canton. In practice, such provisions are used to present the annual financial statements realistically and to disclose risks transparently.