Accounts Receivable (AR)

What Is Accounts Receivable?

Accounts receivable (AR) represents money that customers owe your business for goods or services already delivered but not yet paid for. When your business sends an invoice to a customer and the customer hasn't paid yet, that outstanding amount is accounts receivable — an asset on your balance sheet.

AR vs. AP: The Core Distinction

Accounts receivable and accounts payable are mirror images of each other, and they are frequently confused:

• Accounts Receivable (AR) = money owed to your business by customers. You are the seller. You issued the invoice. You are waiting to be paid.
• Accounts Payable (AP) = money your business owes to vendors and suppliers. You are the buyer. You received the invoice. You need to pay.

A simple way to remember it: AR is an asset (it's value coming in), AP is a liability (it's an obligation going out).

The AR Process

The AR cycle works as follows:

1. Your business delivers goods or services to a customer.

2. You issue an invoice requesting payment.

3. The invoice is recorded in your accounting system as AR.

4. The customer pays (partially or in full).

5. The payment is applied to the invoice, reducing or eliminating the AR balance.

6. Unpaid invoices accumulate in AR aging reports for follow-up.

AR Aging Reports

An AR aging report shows outstanding customer invoices grouped by how long they've been unpaid: current (0–30 days), 31–60 days, 61–90 days, 90+ days. This is the primary tool for managing collections — the older the receivable, the harder it is to collect.

How AR Invoices Differ from Vendor Invoices in Data Extraction

When bookkeepers talk about invoice data extraction, they almost always mean vendor invoices — invoices received from suppliers, processed through AP. These are the invoices you're keying into QBO or Xero as bills.

AR invoices are outgoing — your business creates them, usually in your own accounting software. They don't typically need to be "extracted" from PDFs because you generated them yourself.

The distinction matters when scoping an extraction project: if a client asks to extract invoices from a folder of PDFs, clarify whether those are vendor invoices (AP) or customer invoices (AR). The workflows, the fields that matter, and the destination in the accounting system are entirely different. Most extraction tools, including SkipEntry, are purpose-built for the AP side.