Accounts receivable

Accounts receivable — often called debtors in traditional British bookkeeping — is the total amount customers owe you at any given moment. When you raise a sales invoice in Xero and the customer has not yet paid, that amount sits in accounts receivable. It is a current asset: real money the business is entitled to, but has not yet collected. The running total appears on your balance sheet under current assets, and the individual invoices make up your aged debtors report.

Why it matters for reconciliation and month-end

Accounts receivable is a key reconciliation checkpoint. At month-end, every outstanding sales invoice must be reviewed: is it genuinely awaiting payment, or has a receipt arrived in the bank unmatched? A bank line coded to a nominal account rather than allocated to the open invoice leaves the invoice outstanding indefinitely, overstating debtors. Xero’s reconcile tab and JAX will both attempt to match incoming receipts to open invoices, but partial payments and split remittances often require manual allocation.

For example, if you invoiced a client £2,400 and they paid in two tranches of £1,200 a fortnight apart, each bank line must be allocated separately. Until both are matched, the invoice remains open in aged debtors — a useful prompt, but also a source of misleading month-end totals. Clearing open items before finalising the period is a standard month-end control.