Accounts receivable and payable explained
Two of the most important balances in your books are accounts receivable (money your customers owe you) and accounts payable (money you owe your suppliers). This guide explains what they are, how Sales Scribe keeps them accurate, and where to see them.
Accounts receivable — what customers owe you
Every time you issue a sales invoice, Sales Scribe increases your accounts receivable by the invoice total. Every time a customer's payment is allocated to an invoice, or a credit note is applied, receivables go down again.
The running total of everything your customers owe is held in a single AR control account (short for "accounts receivable control"). You choose which ledger account plays this role in Settings → Accounting.
You can see receivables in several places:
- Each customer's outstanding balance on their account page.
- The Outstanding and Overdue tiles on your dashboard.
- The Aged Receivables report, which breaks the total down by how overdue it is.
- A customer's statement.
Accounts payable — what you owe suppliers
The mirror image. When you post a purchase invoice, Sales Scribe increases your accounts payable. When you pay a supplier and allocate the payment, or apply a purchase credit note, payables go down.
The total you owe is held in the AP control account, also chosen in Settings → Accounting. You can see it in the Aged Payables report.
Why they are called "control" accounts
A control account is a single account whose balance always equals the sum of many individual balances. Your AR control account balance always equals the total of every customer's balance; your AP control account balance always equals the total of every supplier's balance.
Because Sales Scribe maintains these automatically, you cannot post directly to a control account by hand, and you cannot delete or repurpose it while it is in use. If you try to edit one, you will see a message that it is a control account and cannot be modified. This is a safeguard that keeps your customer and supplier balances trustworthy.
How a balance is cleared
An invoice is considered settled when its outstanding balance reaches zero. That can happen through:
- A payment allocated to it,
- A credit note applied to it,
- A write-off of the remaining balance, or
- a combination of these.
As the balance changes, the invoice's status updates automatically — from Issued to Partially Paid to Paid (see Understand invoice statuses). You never set these statuses by hand.
Important notes
- Drafts don't count. A draft invoice or a draft purchase invoice is not part of receivables or payables until it is issued or posted.
- Foreign-currency balances are converted to your functional currency for the totals in your reports, using the rate captured on each document.
- On-account money. A payment recorded on account but not yet allocated is money received that has not yet reduced any specific invoice. It waits in a holding account until you allocate it. You can find such amounts in the Unallocated Items report.