{"id":220424,"date":"2025-10-15T09:58:44","date_gmt":"2025-10-15T07:58:44","guid":{"rendered":"https:\/\/easy-software.com\/?post_type=glossar&p=220424"},"modified":"2025-10-15T10:15:43","modified_gmt":"2025-10-15T08:15:43","slug":"accounts-receivable-accounting","status":"publish","type":"glossar","link":"https:\/\/easy-software.com\/en\/glossary\/accounts-receivable-accounting\/","title":{"rendered":"Accounts Receivable Accounting"},"content":{"rendered":"
\n
\n
\n
\n\n

At its core lies receivables management. Receivables must not only be recorded accurately, but also actively monitored and systematically assessed.<\/p>\n\n\n

\n\n

\n\n\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\t\n\t\t\t<\/path>\n\t\t\n\t\n\t\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\t<\/path>\n\t\n\n<\/svg>\n<\/span><\/p>\n\n\n\n

What Is Accounts Receivable Accounting?<\/strong><\/h2>\n\n\n\n

Accounts receivable accounting is a subfield of financial accounting. It deals with all business transactions involving receivables from customers \u2013 including unpaid invoices, incoming payments, and dunning procedures.<\/p>\n\n\n\n

The key question is:
Who owes the company how much \u2013 and for how long?<\/mark><\/strong><\/p>\n\n\n\n

This makes accounts receivable accounting far more than just a booking function. It provides essential insights for:<\/p>\n\n\n\n

This makes accounts receivable accounting far more than just a booking function. It provides essential insights for:<\/p>\n\n\n\n

    \n
  • Liquidity management<\/li>\n\n\n\n
  • Controlling<\/li>\n\n\n\n
  • Risk assessment \u2013 especially regarding the default risk of outstanding receivables<\/li>\n<\/ul>\n\n\n\n

    <\/strong><\/p>\n\n<\/div>\n\n\n

    What Does \u201cDebtor\u201d Mean?<\/strong><\/h3>\n\n\n\n

    A debtor<\/em> is a customer who has received goods or services but has not yet paid. In accounting, the term refers to individuals or companies from whom receivables are due.<\/p>\n\n\n\n

    What Does Accounts Receivable Accounting Do?<\/strong><\/h2>\n\n\n\n

    Accounts receivable focuses on customers with outstanding receivables.<\/p>\n\n\n\n

    Typical tasks include<\/mark>:<\/p>\n\n\n\n

      \n
    • Recording and monitoring outgoing invoices<\/li>\n\n\n\n
    • Maintaining debtor accounts<\/li>\n\n\n\n
    • Reconciling incoming payments<\/li>\n\n\n\n
    • Initiating dunning procedures in case of payment delays<\/li>\n<\/ul>\n\n\n\n

      Example:<\/strong>
      A company sells machinery to business clients on account. The accounts receivable department ensures that each invoice is properly recorded, payments are tracked \u2013 and if payment is delayed, the dunning process starts automatically.<\/p>\n\n\n\n

      In short:<\/strong>
      Accounts receivable accounting ensures clarity, structure, and security in managing outstanding receivables.<\/p>\n\n\n\n

      Receivables Management \u2013 The Operational Core<\/strong><\/h2>\n\n\n\n

      Receivables management is the operational heart of accounts receivable accounting. It controls all processes related to customer receivables \u2013 from invoice to payment.<\/p>\n\n\n\n

      Why is this so important?<\/strong>
      Because unpaid invoices are not just annoying \u2013 they directly threaten a company\u2019s liquidity. Professional receivables management ensures that<\/mark>:<\/p>\n\n\n\n

        \n
      • Invoices are issued correctly<\/strong> and promptly<\/li>\n\n\n\n
      • Payment deadlines are monitored<\/strong> and met<\/li>\n\n\n\n
      • Payments are systematically recorded<\/strong> and reconciled<\/li>\n\n\n\n
      • Delays are addressed<\/strong> early<\/li>\n<\/ul>\n\n\n\n

        It\u2019s not just about efficiency \u2013 it\u2019s also about communication.
        Friendly reminders instead of immediate warnings help maintain customer relationships.<\/p>\n\n\n\n

        Example:<\/strong>
        A software provider sends an invoice for an annual subscription. Receivables management checks whether payment is received on time. If not, an automated reminder is sent \u2013 before the dunning process begins.<\/p>\n\n\n\n

        In short:<\/strong>
        Receivables management combines risk control, liquidity monitoring, and customer care.<\/p>\n\n\n\n

        Dunning Process \u2013 When Payments Are Late<\/h2>\n\n\n\n

        The dunning process kicks in when an invoice isn\u2019t paid on time. It\u2019s a core task of accounts receivable and ensures that outstanding receivables aren\u2019t forgotten \u2013 and ideally still get paid.<\/p>\n\n\n\n

        But how does dunning actually work?<\/p>\n\n\n\n

        Structured Process Instead of Chaos<\/strong><\/h4>\n\n\n\n

        A professional dunning process follows a clear structure. Typically, it consists of several stages:<\/p>\n\n\n\n

          \n
        1. Payment reminder<\/strong>: polite and factual, often via email or letter<\/li>\n\n\n\n
        2. First dunning notice: <\/strong>with reference to the overdue payment and a new deadline<\/li>\n\n\n\n
        3. Second dunning notice: <\/strong>firmer tone, possibly with late fees<\/li>\n\n\n\n
        4. Final notice:<\/strong> prior to handing over to collections or legal department<\/li>\n<\/ol>\n\n\n\n

          Each stage is documented and traceable \u2013 this protects the company legally and creates transparency for the customer.<\/p>\n\n\n\n

          Communication Is Key<\/strong><\/h4>\n\n\n\n

          A good dunning process isn\u2019t just legally sound \u2013 it\u2019s also smart in terms of communication.
          Not every late payment is intentional. Sometimes it\u2019s due to internal processes, misunderstandings, or simple oversight.<\/p>\n\n\n\n

          Accounts receivable plays a mediating role here:<\/p>\n\n\n\n

            \n
          • Clarifies questions <\/li>\n\n\n\n
          • Offers payment arrangements<\/li>\n\n\n\n
          • Keeps communication open<\/li>\n<\/ul>\n\n\n\n

            Practical Example<\/strong><\/h4>\n\n\n\n

            ebtor scoring is a method for evaluating customer payment behavior and creditworthiness.
            The goal: identify risks early and tailor payment terms accordingly.<\/p>\n\n\n\n

            But what exactly gets \u201cscored\u201d \u2013 and how does it help accounts receivable?<\/p>\n\n\n\n

            This keeps the process fair, transparent, and legally secure.<\/p>\n\n\n\n

            Debtor Scoring \u2013 Assessing Risk Early<\/strong><\/h3>\n\n\n\n

            Debitoren-Scoring ist ein Verfahren zur Bewertung des Zahlungsverhaltens und der Bonit\u00e4t von Kunden. Ziel ist es, Risiken fr\u00fchzeitig zu erkennen und Zahlungsbedingungen gezielt zu steuern.<\/p>\n\n\n\n

            Doch was wird dabei eigentlich \u201egescort\u201c und wie hilft es der Debitorenbuchhaltung?<\/p>\n\n\n\n

            What Goes Into the Score?<\/strong><\/p>\n\n\n\n

            Scoring is based on multiple criteria:<\/p>\n\n\n\n

              \n
            • Historical payment data<\/strong> \u2013 how reliably has the customer paid in the past?<\/li>\n\n\n\n
            • Industry insights<\/strong> \u2013 are there typical risks in certain sectors?<\/li>\n\n\n\n
            • External credit reports<\/strong> \u2013 data from agencies like Creditreform or Schufa<\/li>\n\n\n\n
            • Internal assessments<\/strong> \u2013 input from sales and customer service<\/li>\n<\/ul>\n\n\n\n

              The result is a risk classification \u2013 often in the form of score values or traffic light models. These help accounts receivable make decisions:<\/p>\n\n\n\n

                \n
              • Which customers get longer payment terms?<\/li>\n\n\n\n
              • Where are down payments or securities advisable?<\/li>\n\n\n\n
              • When is caution needed?<\/li>\n<\/ul>\n\n\n\n

                Example: Risk-Based Payment Terms<\/strong><\/p>\n\n\n\n

                A new customer places a large order on account. The scoring shows medium risk. The accounting team decides to start with shorter payment terms and monitor behavior. Debtor scoring is a key tool in receivables management \u2013 combining data analysis with business foresight.<\/p>\n\n\n\n

                Conclusion<\/strong><\/h2>\n\n\n\n

                Accounts receivable accounting is more than a bookkeeping routine.
                It manages the entire process around customer receivables \u2013 from invoice to final dunning notice.<\/p>\n\n\n\n

                With structured receivables management, a professional dunning process, and data-driven scoring, it plays a vital role in:<\/p>\n\n\n\n

                  \n
                • Financial stability<\/li>\n\n\n\n
                • Risk control<\/li>\n\n\n\n
                • Customer retention<\/li>\n<\/ul>\n\n<\/div><\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

                  Accounts receivable accounting is the central control hub for all outstanding customer invoices.<\/p>\n","protected":false},"author":62,"featured_media":0,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"class_list":["post-220424","glossar","type-glossar","status-publish","format-standard","hentry","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/easy-software.com\/en\/wp-json\/wp\/v2\/glossar\/220424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/easy-software.com\/en\/wp-json\/wp\/v2\/glossar"}],"about":[{"href":"https:\/\/easy-software.com\/en\/wp-json\/wp\/v2\/types\/glossar"}],"author":[{"embeddable":true,"href":"https:\/\/easy-software.com\/en\/wp-json\/wp\/v2\/users\/62"}],"version-history":[{"count":0,"href":"https:\/\/easy-software.com\/en\/wp-json\/wp\/v2\/glossar\/220424\/revisions"}],"wp:attachment":[{"href":"https:\/\/easy-software.com\/en\/wp-json\/wp\/v2\/media?parent=220424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}