Accounts receivable: definition, formula, and dashboard example
Accounts receivable is the money customers owe you for completed work. Here is how to calculate it, read AR aging buckets, and watch collection health live on a home-service dashboard.
Formula
Accounts receivable = total invoiced revenue – payments collected to date
At any point in time, accounts receivable (AR) is the running total of invoices you have issued but not yet collected. A cleaner view adds aging: group open invoices by how long they have been outstanding (0–30 days, 31–60, 61–90, 90-plus) to see where cash is stuck and how much risk you are carrying.
Some operators also track days sales outstanding (DSO), which expresses AR as a collection-speed ratio. For the DSO formula and worked example, see the related DSO resource.
What is accounts receivable?
Accounts receivable is money your company has earned but not yet received. Every time a technician completes a job and invoices the customer, that invoice becomes an asset on your books: revenue recognized, cash not yet in the bank. For home-service and skilled-trades companies, AR accumulates fast when you run high call volume, offer net-30 commercial terms, or bill after completion on larger installs and retrofits.
The number you want to watch is not the raw AR total but the aging breakdown. An invoice at 15 days old is almost always collectable. The same invoice at 95 days old has a much lower recovery rate and may already be consuming staff time in follow-up calls, dispute resolution, or write-off paperwork. The aging breakdown tells you where the risk is concentrated before it becomes a cash-flow problem.
How the math works
To calculate it, take total invoiced revenue and subtract the payments collected against it to date; what remains is your accounts receivable. Aging it into buckets (0–30, 31–60, 61–90, and 90-plus days) separates what is still within terms from what is actively at risk of write-off, so the balance in the 61-plus buckets is the number a controller acts on first. On a datacube board this lives on the Invoices board, which sums the balance on Pending or Exported invoices with a balance above zero and shows days pending as the current date minus the invoice date.
Who owns accounts receivable and how often to review it
The controller or office manager owns the day-to-day AR queue. The GM and owner review the aging snapshot weekly and the total balance monthly alongside gross margin and job profitability. For companies running commercial work with net-30 or net-45 terms, the controller should review the 61-plus bucket daily. For residential-first companies where most customers pay at point of service, the monthly review is usually enough unless a spike appears.
What distorts the accounts receivable number
Three common distortions: first, invoices posted to the wrong date in your CRM or QuickBooks move open invoices between aging buckets without any cash changing hands, making collection health look better or worse than it is. Second, credits and adjustments sitting in the queue as open items inflate the receivable balance and skew the aging. Third, jobs marked complete before a final inspection or punch list is signed off create invoices the customer legitimately disputes, inflating 61-plus balances. Clean invoice posting discipline is the first requirement for a trustworthy AR number.
AR aging snapshot: one plumbing company, end of June
| Aging bucket | Balance | % of total AR | Action required |
|---|---|---|---|
| Current (0–30 days) | $52,000 | 62% | Send payment reminder at day 25 |
| 31–60 days | $18,000 | 21% | Personal call from office manager |
| 61–90 days | $9,000 | 11% | Escalate; flag for GM review |
| 90+ days | $5,000 | 6% | Collections or write-off decision |
| Total AR | $84,000 | 100% | 17.5% of monthly invoiced revenue |
What good and poor AR collection health looks like
Targets vary by trade, payment terms, and customer mix. Use these as directional reads and set your own baseline from the last 90 days of invoiced revenue and payment timing.
- 90%+ of AR balance in the current (0–30 day) bucketCollections are running cleanly; customers are paying on timeGood
- Current
- Target
- 61-plus day bucket growing faster than invoiced revenueA process gap or customer dispute is letting receivables age; act nowWatch
- Current
- Target
- Total AR as a percentage of monthly revenue is steady month over monthCollection speed is consistent with your billing cycle and customer mixGood
- Current
- Target
- 90-plus day bucket exceeds 5% of total ARHigh write-off risk; review invoices for disputes, bad addresses, or delinquent accountsPoor
- Current
- Target
- AR rising while new job bookings are flatCollections are slowing; could be a staffing, process, or customer-quality issueWatch
- Current
- Target
- Month-end AR spike that resets each billing cycleNormal for companies billing on completion; the current bucket should absorb it within termsGood
- Current
- Target
| Metric | Current | Target | Status |
|---|---|---|---|
| 90%+ of AR balance in the current (0–30 day) bucketCollections are running cleanly; customers are paying on time | Good | ||
| 61-plus day bucket growing faster than invoiced revenueA process gap or customer dispute is letting receivables age; act now | Watch | ||
| Total AR as a percentage of monthly revenue is steady month over monthCollection speed is consistent with your billing cycle and customer mix | Good | ||
| 90-plus day bucket exceeds 5% of total ARHigh write-off risk; review invoices for disputes, bad addresses, or delinquent accounts | Poor | ||
| AR rising while new job bookings are flatCollections are slowing; could be a staffing, process, or customer-quality issue | Watch | ||
| Month-end AR spike that resets each billing cycleNormal for companies billing on completion; the current bucket should absorb it within terms | Good |
Warning
Data visibility gap: AR aging buried in QuickBooks reports
Most home-service controllers pull AR aging from QuickBooks once a week, or once a month, by running a report manually. By the time an invoice crosses into the 61-plus bucket, three to four weeks have already passed since anyone flagged it. Companies with QuickBooks connected to a dashboard can surface the aging breakdown in real time alongside revenue, gross profit, and job-level detail, so the controller sees the 61-plus balance grow the day it crosses the threshold rather than at month-end.
Accounts receivable on a live financial dashboard
How AR aging appears on a datacube Invoices and Financial board, refreshed from QuickBooks so the controller and owner can see collection health without running a manual report.
Figures are illustrative. Your datacube Financial board reflects your own QuickBooks data, billing cycle, and connected invoice sources.
Info
Controller takeaway: AR is a leading indicator of cash-flow pressure
When the 61-plus day bucket grows faster than invoiced revenue, it usually means one of three things: collection follow-up is falling behind, a customer segment is getting longer terms than your process supports, or a dispute or quality issue is holding payments. Catching the pattern in week two instead of at month-end gives you two to three extra weeks to recover the cash before it affects payroll or vendor payments.
KPIs to read alongside accounts receivable
| KPI | Why it pairs with AR |
|---|---|
| Gross margin | AR tells you cash timing; gross margin tells you whether the revenue is worth collecting |
| Job profitability | Identifies which jobs or customer types are slow to pay and erode net profit |
| Average ticket | Higher average tickets mean larger open invoices; a single slow-pay job has more impact |
| Revenue per technician | A tech generating high invoiced revenue but with poor collection rates distorts the margin picture |
| Marketing ROI | Campaigns that attract slow-paying customer segments inflate AR and depress real ROAS |
What to take away
- Accounts receivable is earned revenue sitting in limbo. The aging breakdown, not the raw total, tells you how much of it you will actually collect and when.
- The 61-plus day bucket is your early warning system. When it grows faster than invoiced revenue, a collection process problem is already underway.
- Clean invoice posting discipline is the prerequisite. Date errors and unresolved credits silently inflate aging buckets without reflecting any real collection failure.
- With QuickBooks connected to a dashboard, the controller sees AR aging update through the day rather than pulling a manual report at month-end when the cash is already three weeks late.
Accounts receivable FAQs
See your accounts receivable in a datacube dashboard
Connect your QuickBooks account and watch AR aging buckets update throughout the day, so your controller and GM can catch slow-paying invoices in week two instead of discovering the problem at month-end.
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