How Accounts Receivable fits the billing lifecycle

This article applies to Aiwyn Practice. On Aiwyn Payments, the sidebar shows Payments instead of Accounts Receivable.

This article explains where Accounts Receivable sits between sending an invoice and collecting on it, what belongs in the module, and why it's split into four tabs.

Accounts Receivable holds the money side of billing

Billing in Aiwyn Practice moves work through a set of modules, each owning one stage:

1. WIP holds unbilled time and expenses.
2. Draft Invoices turns that work into a draft, where it's reviewed, adjusted and approved. A draft can still change.
3. When a finalized draft is sent, the invoice is issued. It appears in Invoices as a permanent record, and its receivable is recorded in Accounts Receivable.
4. Accounts Receivable records everything that changes what the client owes from then on: payments, write-offs, credit adjustments and debit memos.
5. Collections chases the balances that stay overdue.

For firms on Aiwyn Practice, Aiwyn is the system of record for receivables. The Accounts Receivable ledger isn't copied from another system, so what you record here is the client's balance. The ledger is scoped to the firm rather than to each legal entity.

An invoice enters Accounts Receivable when it's sent, not when it's drafted

A draft invoice isn't a receivable. It hasn't been issued, so nothing in Accounts Receivable changes while you create, edit, return or delete a draft.

Sending a finalized draft posts it. Posting creates the invoice's record in Accounts Receivable, and the invoice appears on the Transactions tab with a type of Invoice and its amount as a debit. If an invoice is scheduled, it isn't posted when you set the schedule; it enters Accounts Receivable when it's delivered. See How an invoice is issued and delivered.

From that point, the invoice's content is fixed. Changes to what the client owes are recorded as new entries in Accounts Receivable, or the invoice is reversed. See How to change a sent invoice.

The invoice and its balance live in different modules for a reason

Invoices holds the document: the invoice number, the PDF, the draft it came from and its payment status. Accounts Receivable holds the ledger of everything that has changed the balance on it.

The invoice's status is a result of that ledger. An invoice shows Paid once allocations in Accounts Receivable cover its full balance, and its Outstanding amount reflects what hasn't been covered yet. So when a client's balance is wrong, the fix is almost always in Accounts Receivable, not in Invoices. An invoice can't be edited after it's sent.

Four kinds of entry change what a client owes

You record four kinds of entry from New transaction on the Transactions tab:

• Payments reduce what the client owes. They record a check, ACH or other payment received.
• Write-offs reduce what the client owes without any cash. They remove a balance your firm won't collect.
• Credit adjustments reduce what the client owes, for example to correct a billing error or give a courtesy discount.
• Debit memos increase what the client owes, outside the normal invoicing workflow.

Payments made through the client portal or a Quick Payment Link also land in the ledger. Quick Payment Link payments arrive unallocated.

An entry only reduces a specific invoice once it's allocated to that invoice. See How allocation determines a client's true outstanding balance. Entries can't be deleted, so mistakes are corrected with further entries or status changes. See Why AR transactions are corrected, not deleted and How write-offs differ from credit adjustments.

The four tabs answer four different questions

• Transactions is the ledger. Every invoice, payment, write-off, credit adjustment and debit memo appears as a row, with its debit or credit amount, remaining Balance and Allocation state. It answers "what does this client owe, and why?"
• Payment History is the processor view. It lists payments processed through Aiwyn, including manually recorded checks and ACH payments, and breaks each one into Total Paid, Principal, Processing Fee, International and Late Fee, so you can reconcile against your processor's settlement reports. Refunds of online payments start here. It answers "how was this payment made up?"
• Payment Plans is the forward view. It lists the autopay arrangements clients set up in the payment portal, which charge a saved payment method on a schedule until their end date or cancellation. It answers "what will be charged without anyone at the firm acting?"
• Portal Users is the access view. It shows who has access to your firm's client payment portal, their username and the client accounts they can reach. It answers "can this contact pay online at all?"

Neighboring modules own the steps before and after

The figures in Reports → Outstanding AR are refreshed near real time.

Collections works from open invoice balances, not simply the client's net ledger balance. A collection reminder email is sent only when the client has at least one open invoice. Open late fees alone don't trigger an email. The balance threshold can optionally include unapplied credits and late fees, so how you allocate in Accounts Receivable still affects which clients meet that threshold.

Related

• How an invoice is issued and delivered
• How allocation determines a client's true outstanding balance
• Why AR transactions are corrected, not deleted
• How write-offs differ from credit adjustments
• How to change a sent invoice
• How an invoice becomes paid or overdue
• How a payment plan charges a client automatically
• Record and allocate payments
• Record adjustments, memos and write-offs
• Transactions list reference
• Payment history and payment plans reference
• Outstanding AR report reference