Accounts receivable

Accounts receivable (AR) is the function and the ledger that tracks what a business is owed by its customers. In Business Central and Dynamics 365 Finance, AR transactions are created by posted sales invoices and credit memos and settled by customer payments applied through cash receipt journals or bank reconciliations. Standard AR features include payment terms, customer credit limits, finance charges, reminder letters, customer statements, payment discounts, and ageing reports. AR entries post simultaneously to the customer ledger and the general ledger. The AR function is often paired with credit and collections workflows for chasing overdue balances.

In practice, AR ageing is the report most finance teams actually watch day to day — it buckets open customer balances by how overdue they are (current, 30, 60, 90+ days) and is the working tool behind any collections effort. Customer credit limits enforce discipline automatically: an order that would push a customer's outstanding balance past their limit gets held or flagged rather than silently shipped, catching a credit risk before it becomes a bad debt rather than after.

Where confusion shows up: a customer payment applied against the wrong invoice (common when a customer pays a round number that doesn't match any single invoice exactly) leaves both the paid invoice and the payment showing as open until someone manually applies them together — this is a matching problem, not a posting error, and the fix is reapplying the payment, not reposting anything. AR and the accounts payable side of the same customer relationship (where a company both buys from and sells to the same counterparty) are tracked entirely separately by default; netting them against each other requires deliberate setup, not something that happens automatically just because the same company appears on both sides.