Collect With Confidence, Part 1: Your Receivables Are Your Cash — Just Not Yet

Last month, our Finish Strong series walked through getting your books, your records, and your handoff to your tax preparer ready for year-end. This month, I want to zoom in on one line of your Balance Sheet that quietly decides how comfortable your year-end actually feels: Accounts Receivable.

Welcome to Collect With Confidence: A Small Business Owner's Guide to Accounts Receivable. Over the next four weeks, we will talk about what your receivables really are, how to invoice in a way that gets you paid, how to follow up without damaging relationships, and how to clean up your receivables before the year closes.

What Accounts Receivable Really Is

Accounts Receivable — A/R for short — is the money your customers owe you for work you have already done or products you have already delivered. You earned it. You sent the invoice. But it has not landed in your bank account yet.

If you followed our Know Your Numbers series in August, you will remember that A/R shows up as an asset on your Balance Sheet. That is accurate — it is something of value your business owns. But here is the part that trips up so many business owners: you cannot pay your rent, your payroll, or your suppliers with an asset that is sitting in someone else's checking account.

This is exactly how a profitable business runs short on cash. The Profit and Loss Statement says you had a great quarter. The bank balance says otherwise. Very often, the gap between those two stories is sitting right there in Accounts Receivable.

A Story I See Every Fall

Every year around this time, I sit down with a business owner who is frustrated. Sales are up. They are busier than ever. And yet they are stressed about cash. When we pull up their receivables, the answer is usually staring back at us: a handful of invoices that are 60, 90, even 120 days old — from good customers, often people they like — that simply slipped through the cracks while everyone was busy.

Nobody did anything wrong, exactly. The work got done, the invoices went out, and then life happened. But those old invoices add up, and the longer they sit, the harder they are to collect.

Your Most Important A/R Report: The Aging Summary

If you take one thing from this post, let it be this: learn to read your A/R Aging report. Both QuickBooks Online and Xero will produce one in seconds.

The aging report sorts every unpaid invoice by how long it has been outstanding, usually in buckets like these:

• Current — Invoices that are not yet due. This is healthy, normal A/R.

• 1–30 days past due — A gentle reminder usually does the trick here.

• 31–60 days past due — Time for a more direct follow-up, and possibly a phone call.

• 61–90 days past due — This is a warning sign. Collection gets harder from here.

• Over 90 days past due — These invoices need a real decision and a real plan.

The general rule of thumb in my experience is simple: the older an invoice gets, the less likely it is to be paid in full. Time is not on your side with receivables.

Why This Matters Right Now

October is the perfect month to get serious about A/R, for three reasons.

• You still have time to collect. An invoice that is 45 days old today can still be collected before December 31. An invoice you ignore until January is a much tougher conversation.

• Your year-end numbers depend on it. If your A/R balance includes invoices that will never be paid, your Balance Sheet is overstating what your business actually owns. That matters when you hand your books to your tax preparer.

• Your customers are planning their budgets, too. Many businesses are closing out their own years. A timely, professional reminder now is far more likely to get attention than one sent in the middle of the holidays.

Your First Step This Week

Before next week's post, I would encourage you to do one thing: run your A/R Aging Summary as of today and simply look at it. Do not fix anything yet. Just notice. How much is current? How much is past due? Are there any names that surprise you?

That single report will tell you a great deal about the health of your cash flow — and it sets us up perfectly for next week, when we talk about how to invoice in a way that gets you paid the first time.

Have Questions? MMB MBA Can Help.

At MMB MBA, LLC, we help individuals and small businesses in Southern Maine and beyond build financial confidence and keep their books accurate, organized, and ready for whatever comes next. Whether you would like help reading your A/R Aging report, catching up on your invoicing, or simply having a knowledgeable partner in your corner, we offer full-service bookkeeping, QuickBooks and Xero consulting and training, forensic accounting, and one-on-one tutoring in accounting and financial concepts.

General Informational Purpose Only

The content published in this blog post, including all text, checklists, examples, recommendations, and any other materials contained herein (collectively, the "Content"), is provided by MMB MBA solely for general informational and educational purposes. The Content is not intended to be, and should not be construed as, legal advice, accounting advice, financial advice, tax advice, investment advice, or any other form of professional advice. Reading this blog post does not create any professional relationship — including but not limited to an attorney-client relationship, accountant-client relationship, or consultant-client relationship — between you and MMB MBA or any of its principals, employees, contractors, or affiliates.

Michelle McNeil-Brown, MBAOctober 5, 2026Comment

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