What is Accounts Receivable?

Accounts receivable (AR) represents the money your clients owe you for work you have completed and invoiced but have not yet been paid for. In simple terms, it is the total of all your outstanding invoices.

For example, if you have sent three invoices — £500, £1,200, and £800 — and none have been paid yet, your accounts receivable is £2,500.

Managing accounts receivable effectively is crucial for cash flow. Key practices include:

• Invoice promptly: Send invoices as soon as work is delivered — delays in invoicing lead to delays in payment
• Set clear payment terms: Use Net 30 or shorter terms and display them prominently
• Follow up consistently: Send reminders before and after the due date
• Track ageing: Monitor how long invoices have been outstanding (30, 60, 90+ days)
• Offer easy payment methods: Bank transfer, card payments, or payment links reduce friction

The "ageing" of accounts receivable is important. An invoice that is 90+ days overdue is significantly harder to collect than one that is 7 days overdue. The longer you wait to chase payment, the less likely you are to receive it.

In accounting, accounts receivable is an asset on your balance sheet — it represents money you are owed. However, unlike cash in the bank, you cannot use it to pay your bills. This is why healthy AR management is essential for freelancers.

OwnedWork tracks your accounts receivable automatically, showing you outstanding invoices, overdue payments, and total amounts owed at a glance.