It’s one thing to recognize a sales receivable (note that it’s yet to be received) and another to account for the actual collection (received this “something to be received”. That’s what makes me most happy – its real money received and an asset the company can use for either buying new goods, make investments or pay salaries. In my personal opinion collecting receivables should be number one priority in every company. 

So how would one account for the collection? It’s important to realize that this entry only affects your company’s assets and nothing else (unless you’ve given say a cash discount). A simple, straightforward receivables collection affects only two accounting lines – cash and receivable balances. Let me show you.

Let’s presume that we’ve now collected to receivable we previously recognized in the amount of 1,000. On one hand we must show that we gained money, so that’s the debit side of the entry. With the credit we’re reflecting the decrease in receivables that we now collected and as such they’re no longer outstanding:

Should our client pay in parts, say 60% today and 40% in a week or so, we’re recognizing the collection also in parts – 60% with the first entry and 40% with the second one thus closing also the receivable balance:

It’s important to remember recognizing customer payments as they happen since they reflect on the actual amounts of money you’ve got to use.