To calculate your accounts receivable, total every unpaid customer invoice at a point in time, or roll the balance forward: beginning AR plus new credit sales minus cash collected equals ending AR. Accounts receivable is a running balance, so it changes every time you raise an invoice or receive a payment.
The first calculator below rolls your balance forward from sales and collections. The second estimates the receivables you would expect to carry from your annual credit sales and your collection period (DSO), using (annual credit sales divided by 365) multiplied by DSO. Both also show the related turnover figures. Use them to check your AR balance, forecast working capital, or sense-check whether your receivables are proportionate to your sales. The related efficiency measure is AR turnover ratio = net credit sales รท average accounts receivable.
Roll your receivables forward: start with what was owed, add new credit sales, subtract what customers paid.
beginning AR + credit sales - collectionsProject the receivables balance you would expect to carry, given your annual credit sales and how long you take to get paid.
(annual credit sales / 365) x DSO"Accounts receivable" is a running total, so the most common questions are really about how it moves and how to judge whether it is healthy. The two calculators above handle the movement; the sections below cover the formulas and benchmarks. To put a cost on that balance and the hours spent collecting it, use the accounts receivable ROI calculator.
How to Calculate Accounts Receivable (Free AR Calculator) (1:35)
Video chapters and transcript
- 0:00 Short answer
- 0:24 Ending AR balance calculator
- 0:35 $40,000 + $120,000 - $110,000 = $50,000
- 0:54 (Annual credit sales / 365) x DSO
- 1:12 Pick the method that matches the question
How do you calculate accounts receivable? To calculate your accounts receivable, total every unpaid customer invoice at a point in time. Or roll the balance forward: beginning AR, plus new credit sales, minus cash collected, equals ending AR.
Accounts receivable is a running balance, so it changes every time you raise an invoice or receive a payment. The free calculator on accounting.events does the roll-forward for you. Enter what customers owed at the start of the period, the new credit sales, and the cash you collected.
Take one period. Beginning AR of forty thousand dollars, plus one hundred and twenty thousand of new credit sales, minus one hundred and ten thousand collected, gives ending AR of fifty thousand. Receivables grew by ten thousand, because billing outpaced collections.
The second calculator estimates the balance you should expect to carry. It divides annual credit sales by three hundred and sixty-five, then multiplies by your days sales outstanding. Six hundred thousand dollars of credit sales at forty-five days gives about seventy-four thousand.
Use the method that matches the question. To find AR right now, sum the open invoices. To track a period, roll it forward. To plan ahead, estimate it from sales and DSO.
How accounts receivable is calculated
There are two situations people mean by "calculating AR." The first is finding the balance at a moment in time; the second is rolling it forward over a period.
| You want to | Method |
|---|---|
| Find AR right now | Sum all open, unpaid invoices, then subtract the allowance for doubtful accounts for net AR |
| Roll AR forward | Beginning AR + credit sales in the period − cash collected = ending AR |
| Estimate AR from sales | (Annual credit sales ÷ 365) × days sales outstanding |
Beginning AR of $40,000, plus $120,000 of new credit sales, minus $110,000 collected, gives ending AR of $50,000. Receivables grew by $10,000 because billing outpaced collections that period.
For the underlying concept and balance-sheet treatment, see what is accounts receivable.
How do you calculate accounts receivable?
Accounts receivable at a point in time is every unpaid customer invoice added up, less the allowance for doubtful accounts, which gives net AR. Over a period, use the roll-forward: beginning AR plus credit sales minus cash collected equals ending AR. The calculators above apply both approaches.
What is the formula for AR?
Accounts receivable has three working formulas, because AR is a balance and not a single calculation. They are: open invoices minus allowance (the balance now); beginning AR + credit sales − collections (the roll-forward); and (annual credit sales ÷ 365) × DSO (an estimate from sales). The ratio people often want is AR turnover = net credit sales ÷ average AR.
How do you calculate the accounts receivable turnover ratio?
The accounts receivable turnover ratio equals net credit sales for the period divided by average accounts receivable for the same period. Average AR is (beginning + ending) divided by two. For example, $600,000 of credit sales over an average AR balance of $75,000 gives a turnover of 8 times a year. Our AR turnover ratio calculator does this and benchmarks the result, and the average AR calculator works out the average for you.
What is a good AR ratio?
For AR turnover, 5 to 10 times per year is a solid benchmark and higher is better. If you mean the percentage of AR that is overdue, a healthy book keeps under 10% in the 90+ days bucket. The two move in opposite directions: you want turnover high and overdue percentage low.
Source: Upflow, AR turnover ratioWhat is a healthy accounts receivable percentage?
A healthy AR book keeps about 70 to 80% or more current and under 10% in the 90+ days overdue bucket. Once the 90+ bucket passes 15%, it signals a collections problem and rising write-off risk. Run an aging report to see your percentages by bucket.
Source: Resolve, AR aging benchmarksWhat is the 10 rule for accounts receivable?
The cross-aging "10% rule": if more than 10% of a customer's receivables are overdue, typically past 90 days, the whole account is reclassified as high-risk. Lenders use it to size a borrowing base, and credit teams use it to trigger tighter terms on a slow payer.
Source: Emagia, the 10 ruleWhat is the 80/20 rule in accounts receivable?
Roughly 80% of your outstanding balance is owed by about 20% of your customers, so focusing collections on that small, high-value group recovers most of the cash for the least effort. It is the fastest way to bring a large AR balance down.
Source: Controller Academy, the 80/20 ruleWhat are the 5 key ratios?
The current ratio, quick ratio, debt-to-equity ratio, profit margin, and return on assets, covering liquidity, leverage, and profitability. The AR turnover ratio is an efficiency ratio that complements them by showing how fast you convert receivables into cash.
Source: Corporate Finance Institute, financial ratiosPeople also read
Independent software reviews and guides from Accounting.Events.
Sources
2 sources, checked by Julie Turnbridge on October 26, 2026
- Controller Academy, the 80/20 rule controller-academy.com/blog/mastering-the-80-20-rule-in-a...
- Corporate Finance Institute, financial ratios corporatefinanceinstitute.com/resources/accounting/financ...
Last updated October 19, 2026. This guide is general information, not accounting, tax, or financial advice.
