glossary

A Handy Guide to Accounts Receivable Terminology

When you're not completely familiar with a business, sometimes the terms thrown out in conversation can seem like a foreign language.  Here's a quick reference guide to some of the terminology we use in the accounts receivable industry.

Invoice:  An invoice is a bill sent by a service or product provider to the buyer documenting the details of the purchase and the buyer's payment obligations.  An invoice usually includes:

  • a reference number (for bookkeeping purposes)
  • the date of purchase
  • contact information of the buyer and seller
  • descriptions of the item(s) or service(s) purchased
  • the date payment is due (or the number of days the provider is allowing the buyer to pay)
  • the amount due to be paid within the specified period of time.  

Accounts receivable: When the invoice is created, it becomes an "account receivable." All outstanding (unpaid) invoices or other money owed to a company for goods and services they've already provided make up their accounts receivable. By providing buyers time to pay rather than demanding payment at the time of sale, a company essentially has "extended credit" to these customers for a designated time period.     

Statement: Companies with accounts receivable often create statements listing all of the invoices or outstanding debts still owed by a certain customer for a specific period of time. Statements are typically issued on a regular basis (usually monthly). 

B2B: This is short for "Business-to-Business," meaning a business that provides goods and services to other businesses rather than to consumers.

Have more questions?  Our billing professionals have the answers!  And they don't mind working closely with you to determine exactly how IBS can serve your commercial accounts receivable needs.  Request a call today using the quick form below!