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 balance, not the result of a single formula, so it changes every time you raise an invoice or receive a payment.
The first calculator above 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.
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.
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?
At a point in time, add up every unpaid customer invoice, then subtract the allowance for doubtful accounts to get 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?
There is no single "AR formula" because AR is a balance. The three working equations 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 I calculate the AR ratio?
Divide net credit sales by average accounts receivable for the period. Average AR is (beginning + ending) divided by two. 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 ratiosLast updated June 9, 2026. This guide is general information, not accounting, tax, or financial advice.