What is Outstanding Accounts Receivable? (And Why It Matters)

“Outstanding accounts receivable” (AR) refers to the cash which your clients owe you for work you've already invoiced, but haven’t been paid for yet.

It’s revenue you’ve earned. But until it hits your bank account, it doesn’t affect anything other than your balance sheet statement.

For service-based businesses like agencies, this number can quietly grow until it becomes a real problem - affecting everything from cash flow to growth decisions.

‍Why it matters

‍Outstanding AR is often overlooked until you run into cash flow trouble, and it doesn’t really matter whether you’re profitable or not.

Here’s how it can impact your business:

  • Tight cash flow: You’ve done the work and sent the invoice, but can’t use the money to pay your people, freelancers, or taxes.
    ‍
  • Delayed growth: You hold off on hiring or investing because money is stuck in unpaid invoices.
    ‍
  • Early payment incentives: Offer 1-3% discounts for payment in 5-10 days (vs. 30-90 days). Giving clients a small discount if they pay early is a great offer of flexible terms. If they have the cash, they save money, and you get paid sooner. Everyone wins.

All these challenges are often treated as “normal.” Long payment terms and late payments are accepted as just part of doing business, but they don’t have to be.
‍
How to reduce outstanding receivables
  • Send invoices earlier

    Instead of waiting until the end of a project or month, invoice as soon as you can; for example when you hit a milestone or when a certain time has passed. As soon as the client receives the invoice, the days until the due date start ticking and the client can start processing it.
    ‍    ‍
  •  Negotiate better terms

    Net 30 shouldn't be your default. If you have leverage or strong trust, ask for net 14, or to break down payments and invoice some of it upfront. Some clients are used to this type of structure, or even see value in being invoiced as soon as possible.
    ‍
    Pro tip:     If you’re getting close to the end of the year, most businesses have the preference of being invoiced in the current year. Ask what they prefer, and if they want the cost in the current year, either invoice early or shorten the payment terms to make sure the invoice is paid before December 31st.
  • Early payment incentives

    A 1 - 3% discount for payment within 5 - 10 days can be cheaper than borrowing or chasing overdue invoices and gives clients the opportunity to choose what works best for them. It’s like offering multiple ways to pay, but here you’re asking if the customer wants to pay $10,000 in 30 days, or $9,800 in 5 days.

  • Follow up before the due date
    ‍
    Don’t wait until an invoice is late to follow up. A friendly reminder 5 - 7 days before the due date can help you understand if the invoice has been processed and is up for payment. Sometimes invoices get stuck in approvals or have the wrong PO number, and by checking in early - you can help the client make good on their promise to pay before the due date.

A smarter way to manage receivables

‍Cheque is built for businesses that want to reduce outstanding AR, all while strengthening their client relationships.

You set the terms. Your clients can choose to pay early if it helps them - and you get the cash faster without chasing every invoice.

‍If you're curious…Try Cheque on a few invoices next to your current system, no pressure. If it works, we’ll help you make the switch. If not, no harm done.Let’s manage your AR together.

Schedule your demo today →

Read “How to Offer Early Payment Discounts” →
Read “How to Better Manage Accounts Receivable” →