Accounts receivable (AR) is the money owed to a business by its customers for goods or services delivered but not yet paid for. In accounting terms it is a current asset on the balance sheet. Effective AR management, invoicing promptly, collecting on time and managing overdue debts, has a direct impact on cash flow. In Microsoft Dynamics 365 Business Central, accounts receivable is managed through the customer ledger with integrated invoicing, cash allocation and credit control tools.
How accounts receivable works in Business Central
When a sales order is shipped or a service completed, Business Central posts a sales invoice to the customer ledger and to the AR control account in the general ledger. When payment arrives it is applied against the open invoice, clearing the balance automatically. Aged debtors reports, payment reminder workflows and cash flow forecasting help businesses stay on top of collections.
Accounts receivable in practice
- A business cuts average debtor days from 52 to 34 by using Business Central's automated reminder workflow, sending escalating reminders at 7, 14 and 30 days overdue.
- A credit controller uses the aged debtors report to prioritise collection calls each Monday, focusing on high-value overdue accounts first.
- A finance team uses direct debit integration to collect recurring payments automatically on invoice due dates, removing manual payment chasing.
- A business with 1,200 active customers uses credit limit functionality to put orders on hold automatically when a customer exceeds their agreed limit.
How Advantage configures accounts receivable in Business Central
Advantage configures payment terms, credit limits, reminder workflows and cash application rules during every Business Central implementation. For clients with high transaction volumes, we integrate payment processing solutions to automate cash allocation.
Frequently Asked Questions
What is an aged debtors report?
An aged debtors report shows the total owed by each customer, broken down by how long each invoice has been outstanding. It is the primary credit control tool in Business Central, available in real time at any point.
How does Business Central handle customer credit limits?
Credit limits can be set per customer. When a sales order or invoice would push a customer over their limit, the system issues a warning and can place the order on hold pending credit controller approval.
Can Business Central send automated payment reminders?
Yes. Business Central's reminder functionality generates and sends payment reminders at configurable intervals after invoices become overdue, with escalating reminder levels and fully customisable text.
