Total money owed to a business by customers for goods or services sold on credit
Accounts Receivable (AR) refers to the total amount of money owed to a business by its customers for goods or services that have been delivered but not yet paid for. It is recorded as a current asset on the balance sheet because it represents money that is expected to be collected in the near future, typically within 30 to 90 days. In Indian accounting terminology, accounts receivable is commonly known as sundry debtors. Every time you make a credit sale, the invoice amount is added to your AR balance, and every time a customer makes a payment, it reduces. Managing AR effectively is one of the most critical aspects of running a successful small business in India, where credit sales are extremely common in B2B trade. Delayed collections can severely impact your cash flow, making it difficult to pay your own suppliers, employees, and GST liabilities on time. Indian businesses should track customer-wise outstanding amounts, set clear credit limits and payment terms, send timely payment reminders, and follow up on overdue invoices. An ageing analysis of receivables helps identify slow-paying customers and potential bad debts before they become unrecoverable.
You run a stationery wholesale business in Indore. At the end of February, your accounts receivable shows: Customer A (school supply shop) — Rs. 75,000 due for 15 days, Customer B (office supplies dealer) — Rs. 1,40,000 due for 35 days, Customer C (retail chain) — Rs. 2,10,000 due for 60 days. Total AR = Rs. 4,25,000. Customer C's payment is overdue by 30 days, so you call them for immediate follow-up. You also decide to reduce Customer C's credit limit from Rs. 3,00,000 to Rs. 2,00,000 until their payment track record improves. Meanwhile, Customer A pays Rs. 75,000, bringing your AR down to Rs. 3,50,000.
They mean the same thing. Accounts receivable is the internationally used term, while sundry debtors is the traditional Indian accounting term. Both refer to the money your customers owe you for goods or services sold on credit. Indian accounting software, including Stock Register, uses both terms interchangeably.
Set clear payment terms upfront (e.g., 15 or 30 days), offer small discounts for early payment (e.g., 1-2% for payment within 7 days), send payment reminders before the due date, follow up immediately on overdue invoices, and set credit limits for each customer based on their payment history.
AR ageing is a report that categorises outstanding receivables by the number of days they have been unpaid — typically 0-30 days, 31-60 days, 61-90 days, and over 90 days. It helps you quickly identify which customers are paying late and how much money is at risk of becoming a bad debt, so you can take collection action early.
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