Most AR problems in small corporations don’t come from complexity — they come from using the wrong workflow for the size of the business. The mistakes usually start small, but they compound over time and lead to inaccurate reporting, inflated income, or messy cleanup at year-end.

Below are the most common issues and how to prevent them before they become problems.

1. Recording deposits instead of clearing invoices

The mistake:
A business issues an invoice, then later enters a bank deposit separately.

The result:
The income is doubled, and the invoice still appears unpaid.

The fix:
If an invoice exists, always clear it using Receive Payment — never “Bank Deposit.”

2. Issuing invoices when payment was received immediately

The mistake:
Creating invoices for jobs that were already paid on the spot.

The result:
Unnecessary AR balances and extra steps.

The fix:
If payment is immediate, skip AR completely and record revenue directly as a deposit.

3. Letting AR sit unpaid on the books when money was collected

The mistake:
Payment was collected, but never matched to the invoice.

The result:
Reports show unpaid receivables that don’t exist in real life.

The fix:
Use Receive Payment and match it to the actual bank deposit.

4. Using AR for tiny or one-off jobs

The mistake:
Treating every client like a large corporate account.

The result:
Unnecessary admin and cluttered AR reports.

The fix:
Reserve AR for clients with delayed payment terms — not casual or immediate payers.

5. Ignoring year-end timing

The mistake:
Not reflecting income that was earned before year-end but paid later.

The result:
Revenue appears in the wrong fiscal year.

The fix:
Use a simple journal entry at year-end to reflect receivables when timing matters.

The underlying principle

AR is a tool to manage delayed payments — not a default setting for every business.

When payment timing is instant or near-instant, AR slows bookkeeping down.
When payment timing is delayed, AR makes bookkeeping cleaner.

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