May 27th, 2026 | By: Ryan RutanCMO | Tags: Business Planning, Accounts Payable, Days Sales Outstanding, Cash Flow, Working Capital, Balance Sheet
Accounts Receivable (A/R) is the balance-sheet asset that tracks money customers owe for products or services already delivered but not yet paid for. It's recorded as a current asset because the company has a legal claim to be paid, and tracked with aging buckets (0-30 days, 31-60, 61-90, 90+) that reveal how quickly customers are actually paying. A/R represents revenue that's been recognized but not yet collected; healthy A/R turns into cash on time; aged A/R becomes collection risk.
The basic mechanics:
Customer signs a $50K contract with Net-30 payment terms. Service is delivered (or in SaaS, the recognized portion is delivered). On the day of invoice:
30 days later, customer pays:
If the customer pays late (60 days), the company holds the receivable on the balance sheet longer; the revenue was already recognized.
A/R aging buckets:
A/R aging is the standard report tracking how old receivables are:
| Aging bucket | Healthy A/R % | Concerning A/R % |
|---|---|---|
| 0-30 days | 70-85% | <50% |
| 31-60 days | 10-20% | >25% |
| 61-90 days | 3-8% | >15% |
| 91+ days | 2-5% | >10% |
Heavy concentration in 60+ day buckets signals collection problems.
Key A/R metrics:
Days Sales Outstanding (DSO): average days from invoice to collection. See [Days Sales Outstanding] for details.
A/R turnover: how many times A/R is "turned over" per year. Higher is better.
Bad debt expense: portion of A/R written off as uncollectible. Healthy SaaS: <1-2% of revenue.
Collections effectiveness: percentage of A/R collected within terms.
How A/R impacts cash flow:
A growing company that doesn't manage A/R well can be profitable on the income statement but cash-strapped because customers pay slowly:
The collection playbook:
Net terms in contracts: define payment terms clearly (Net-30 standard for SMB; Net-60 common for enterprise).
Auto-pay: credit card or ACH auto-pay for SaaS reduces collection effort dramatically.
Dunning sequences: automated email reminders at 0/7/14/21/30/45 days past due.
Collections escalation: manual outreach for 30+ day past due; legal/agency for 60+ days.
Credit checks: for enterprise deals, run credit checks before extending Net-60 or Net-90 terms.
Customer-by-customer monitoring: identify slow-payers and adjust terms accordingly.
Ryan's Take
A/R is where the cash flow problem hides. A growing SaaS company can look profitable on the P&L while $2-3M is stuck in A/R, slowly aging. The discipline that works: monthly A/R aging review, automated dunning at the dates that work, escalation for 30+ day past-due, credit-check enterprise customers before extending Net-60 terms. The pattern that fails: bill customers, assume they'll pay, discover at quarter-end that collections are off by a month and runway is shorter than expected. Cash collection is a discipline, not a hope.
What founders get wrong: Treating A/R as something the finance team handles, not as an operational metric for the founder. The right discipline: review A/R aging monthly; investigate any account 60+ days past due personally; tighten payment terms for chronically slow payers.
Related: [Accounts Payable] · [Days Sales Outstanding] · [Cash Flow] · [Working Capital] · [Balance Sheet]
What is Accounts Receivable (A/R)? Money customers owe a company for services already delivered but not yet paid for. Recorded as a current asset on the balance sheet. Represents revenue recognized but not yet collected.
What is A/R aging? The breakdown of outstanding receivables by how long they've been unpaid (0-30 days, 31-60 days, 61-90 days, 91+ days). Heavy concentration in 60+ day buckets signals collection problems.
What's a healthy A/R aging distribution? 0-30 days: 70-85% of A/R. 31-60 days: 10-20%. 61-90 days: 3-8%. 91+ days: 2-5%. Bad debt write-offs <1-2% of revenue.
How do I improve A/R collection? Net-30 terms with auto-pay where possible; automated dunning sequences (0/7/14/21/30 days); escalation for 30+ days past due; credit checks for enterprise; monthly A/R aging review.
Founding Partner @ Startups.com platform | Clarity.fm, Launchrock, Fundable, Zirtual, and Co-Host of The Startup Therapy Podcast. Ryan has 15 years of experience as a Founder, Advisor, Mentor, and Investor — the quintessential startup guerrilla. He works with 100's of the best startups every year on everything from ideation, idea validation, early marketing traction, customer acquisition to fundraising, scaling, and operations.
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