Accounts receivable: how to track customer debt
Accounts receivable is the amount customers owe the company for goods already shipped or services already rendered. The metric directly affects cash flow, liquidity, and the business’s ability to fund operations without external borrowing. Monitoring receivables supports payment discipline, reduces the risk of non-payment, and helps identify problem accounts in a timely manner.
What the metric measures
It tracks the total amount of debt, its structure by customer and by overdue period (aging: 0–30, 31–60, 61–90, 90+ days). This makes it possible to see risk concentration, assess the impact of payment terms on cash flow, and measure collection performance.
Calculation
Receivables balance at the end of the period: opening balance + credit sales − payments received − adjustments (returns, offsets, write-offs). For a quick assessment of payment discipline, DSO (Days Sales Outstanding) is used — the average number of days until an invoice is paid.
Calculation example
At month end customers owe 1,200,000, of which 300,000 is more than 30 days overdue. The overdue share = 300,000 / 1,200,000 × 100 = 25%. With monthly revenue of 900,000, days sales outstanding (DSO) ≈ 1,200,000 / 900,000 × 30 = 40 days.
Data sources
ERP/accounting system (1C, etc.), the invoicing and acceptance certificate module in the CRM, bank statements, and payment services. It is important to align customer reference lists and the rules for allocating payments, discounts, and returns.
Interpretation
Pay attention to the share of overdue amounts in the total and to the DSO trend. Receivables growing faster than revenue are a signal of the risk of cash gaps. A high concentration in the top 10 customers increases credit risk; problem segments should be singled out separately.
Useful breakdowns
- Customers, managers, regions
- Payment terms (prepayment, Net 7/14/30)
- Sales channels (online / offline / distribution)
- Currencies and exchange rate differences
- Debt status (current / overdue / to be written off)
Dashboard visualizations
- Bars by aging bucket (0–30 / 31–60 / 61–90 / 90+)
- DSO line over time
- Top debtors with the amount and number of days overdue
- “Manager × customer” heat map
- Plan vs. actual collections for the period
Policy and targets
The credit policy defines limits, payment terms, counterparty checks, and the reminder procedure. In practice, set targets for DSO, the overdue share (for example, ≤10% of total receivables), and the speed of collecting new invoices. For certain segments, advance payments, factoring, or receivables insurance are appropriate.
Common mistakes
- Shipping without confirmed limits and contracts
- No reconciliation statements or reminder procedures
- Manual payment deferrals without penalties or checks
- Mixing currencies without conversion
- Late write-offs of “dead” debts and no allowance for doubtful accounts
Questions for discussion
- Who accounts for the largest share of overdue debt and why?
- Which invoices are critically overdue and require action in the next 7–14 days?
- How effective are early payment incentives (discount, deferral)?
- Where should limits or payment terms be reviewed?