Accounts Receivable
Accounts receivable tracks what customers owe you. Learn customer setup, Sales & Receivables configuration, cash receipt journals, payment registration, and the customer ledger entry chain.
Setting up accounts receivable
Accounts receivable (AR) is your company’s “money owed to us” tracker.
Every customer you sell to has a card in Business Central. When you send them an invoice, it creates a “they owe us this much” entry. When they pay, the entry gets settled. AR is the mirror image of AP — same concept, opposite direction.
Sofia at Coastal Traders manages 200 customers. She tracks who owes what, follows up on overdue invoices, and processes incoming payments through cash receipt journals.
Creating customer accounts
Open Customers (Tell Me > “Customers”):
| Tab | Field | Purpose |
|---|---|---|
| General | No. | Customer number |
| General | Name | Customer company name |
| General | Customer Posting Group | AR control account (DOMESTIC, FOREIGN) |
| General | Gen. Bus. Posting Group | For General Posting Setup (DOMESTIC, EXPORT) |
| Invoicing | Payment Terms Code | When invoices are due |
| Invoicing | Payment Method Code | How the customer pays (BANK, CARD, DD) |
| Invoicing | Currency Code | Default currency |
| Payments | Customer Bank Accounts | Bank details for direct debit collection |
| Payments | Preferred Bank Account | Default bank for collections |
| Shipping | Shipping Agent Code | Default carrier |
| Shipping | Location Code | Default ship-from location |
| Shipping | Ship-to Addresses | Multiple delivery addresses |
Customer payment methods
Customer payment methods define how customers pay you. They can have a balancing account that auto-fills:
| Code | Description | Bal. Account | Use Case |
|---|---|---|---|
| BANK-TRANSFER | Bank transfer | Operating bank account | Standard B2B payments |
| CREDIT-CARD | Credit card | Card processing GL account | Online sales |
| DIRECT-DEBIT | Direct debit | Operating bank account | Recurring collections |
| CASH | Cash | Cash GL account | Walk-in customers |
Sales & Receivables Setup
Open Sales & Receivables Setup (Tell Me > “Sales & Receivables Setup”):
| Field | What It Controls |
|---|---|
| Customer Nos. | Number series for new customers |
| Quote/Order/Invoice/Credit Memo Nos. | Number series for sales documents |
| Allow VAT Difference | Can users adjust VAT on sales invoices |
| Stockout Warning | Warn when selling more than available inventory |
| Credit Warnings | Alert when customer exceeds credit limit |
| Default Posting Date | Work date or document date |
| Calc. Inv. Discount | Automatically calculate invoice discounts |
Exam tip: Credit Warnings
Credit Warnings can be set to:
- Both Warnings — warn on both overdue balance and credit limit
- Credit Limit — warn only when credit limit is exceeded
- Overdue Balance — warn only when customer has overdue invoices
- No Warning — no alerts (risky)
The exam tests: “How does Sofia prevent sales to customers who have overdue invoices?” → Enable Credit Warnings = Both Warnings or Overdue Balance.
Processing customer payments
Cash receipt journals
The Cash Receipt Journal is where Sofia records incoming customer payments:
- Open Cash Receipt Journals (Tell Me > “Cash Receipt Journals”)
- Enter payment details:
- Account Type = Customer
- Account No. = customer number
- Amount = payment received
- Applies-to Doc. No. = which invoice the payment covers
- Balancing account = the bank where the money arrived
- Post the journal
Payment registration
Payment Registration is a simplified alternative to the cash receipt journal:
- Open Register Customer Payments (Tell Me > “Payment Registration”)
- See a list of open customer invoices
- Check off invoices that have been paid
- BC creates the journal entries automatically
| Feature | Cash Receipt Journal | Payment Registration |
|---|---|---|
| Complexity | Full journal interface | Simplified checklist |
| Flexibility | Partial payments, multiple applications | Full payment only (by default) |
| Best for | Finance teams, complex scenarios | Quick processing, simple payments |
| Posting control | Manual post after review | Post on save |
| Balancing account | User-selected | Pre-configured default |
The customer ledger entry chain
Same structure as the vendor chain — mirror image:
Customer Card
└── Customer Ledger Entry (CLE)
└── Detailed Customer Ledger Entry (DCLE)
└── General Ledger Entry (GLE)| Level | What It Stores | Example |
|---|---|---|
| Customer | Master data — name, payment terms, posting groups | Big Corp Ltd |
| Customer Ledger Entry (CLE) | One per document — invoice, credit memo, payment. Amount, due date, open/closed | Invoice SI-1042: $8,000 due 15/05/2026, Open |
| Detailed CLE (DCLE) | One per financial event — posting, application, discount, FX adjustment | Initial: $8,000 / Payment applied: -$8,000 |
| General Ledger Entry | GL impact — debit/credit to GL accounts | Debit AR $8,000 / Credit Revenue $8,000 |
What hits the GL: Sales invoice example
When Sofia posts a sales invoice for $8,000 to a DOMESTIC customer buying RETAIL items:
| GL Account | Debit | Credit | Source |
|---|---|---|---|
| Accounts Receivable (Customer Posting Group: DOMESTIC) | $8,000 | Customer PG | |
| Sales Revenue (General Posting Setup: DOMESTIC + RETAIL) | $8,000 | Gen. Posting Setup | |
| COGS (General Posting Setup: DOMESTIC + RETAIL) | $4,800 | Gen. Posting Setup | |
| Inventory (Inventory Posting Setup) | $4,800 | Inventory PG |
When the customer pays:
| GL Account | Debit | Credit | Source |
|---|---|---|---|
| Bank Account (Bank Account Posting Group) | $8,000 | Bank PG | |
| Accounts Receivable | $8,000 | Customer PG |
AP vs AR: Side-by-side comparison
| Concept | Accounts Payable | Accounts Receivable |
|---|---|---|
| Master record | Vendor | Customer |
| Posting group | Vendor Posting Group | Customer Posting Group |
| Control account | AP (credit balance) | AR (debit balance) |
| Document processing | Purchase invoices | Sales invoices |
| Payment journal | Payment Journal | Cash Receipt Journal |
| Quick payment | — | Payment Registration |
| Ledger chain | V → VLE → DVLE → GLE | C → CLE → DCLE → GLE |
| ”Suggest” function | Suggest Vendor Payments | — |
Knowledge check
Sofia posts a sales invoice for $5,000 to a DOMESTIC customer buying SERVICES. Later, the customer pays $3,000 as a partial payment. What is the Customer Ledger Entry status after the partial payment?
Olivia wants to see which GL accounts were affected when a sales invoice was posted. She opens the Customer Ledger Entry for the invoice. Where does she navigate next?
🎬 Video coming soon
Next up: The final Domain 2 topic — fixed assets and depreciation methods. How to track, depreciate, and report on your company’s long-term assets.