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Accounts Receivable Subsidiary Ledger: Definition and Purpose

July 5, 2023
Bill Kimball

Just imagine having tens or hundreds of customers purchasing or paying at the same time, it’d be hard or maybe even impossible to keep track of a specific customer’s credit balance. It is more detailed than the general ledger as it also includes the transaction and payment of each customer who availed themselves of credit. In essence, “accounts receivable” is the accumulation of non-interest bearing loans extended to customers who purchased products or availed of services on credit. For example, you can restrict access to just you, the top management, the accountant, the employees of the credit department, and the accounts receivable ledger/bookkeeper. Admittedly, preparing and maintaining an accounts receivable ledger is extra work.

Though keeping an accounts receivable subsidiary ledger in addition to a general ledger requires more work and documentation, it is typically worth the extra effort. The analysis that can go into the detail provided by the accounts receivable subsidiary ledger helps organize a company and allows it to perform in a more targeted manner. The main benefit of having an accounts receivable ledger is that gives us access to more detailed information about a business’s accounts receivable.

accounts recievable ledger

Once you have contacted them, write down on the Notes sheet what was said, when payment was promised etc. Diarise to follow up and check that a promised payment has been received by the due date. Every time you enter new data to the spreadsheet, remember to Save before exiting unless your Excel settings automatically save the template. The columns headed Payment and Date are where you will enter each payment received from your customer and date the payment is received. This ledger should only be used for customers whom you allow to buy products and services from you now but only have to pay for later.

Below is a simplified example of an Accounts Receivable Ledger for a fictional company called “BestPrint,” which sells printing services to clients on credit. The ledger shows individual customer accounts and their respective transactions. With an accounts receivable ledger, you’d have access to detailed information about an individual customer’s account. This way, employees that have no business with credit sales or accounts receivable cannot access your business’ accounts receivable ledger. One of these tools is the so-called accounts receivable subsidiary ledger, or simply called accounts receivable ledger.

What is the Accounts Receivable Ledger?

The sum of all invoices in the accounts receivable subsidiary ledger should equal that of the accounts receivables on the general ledger, also known as the control account. The Accounts Receivable Ledger maintains information for each customer, such as their name, address, credit terms, and a record of all transactions, including sales, payments, credit memos, and adjustments. It helps businesses monitor the amounts due from each customer, track payment histories, and identify overdue accounts for collection efforts. An Accounts Receivable Ledger, also known as a subsidiary ledger or customers’ ledger, is a detailed record that tracks individual customer transactions related to accounts receivable.

Or it could be that there will be no detailed information about the accounts receivable transactions. If not properly maintained and/or monitored, the business might lose track of its receivables and lose money in the process. You may also like to see Accounts Receivable Procedures for more information on how to initiate customer accounts and maintaining this system. For example, if it is the month of May and you are entering all May dated invoices then save your spreadsheet with the name Accounts Receivable – May 20xx. Every time you issue an invoice to a customer enter it in the next available (blank) row on the Debtors sheet. The cells in the balance due column indicate how much is left to pay for each invoice – this is calculated automatically because of the formulas we have included.

accounts recievable ledger

One of the asset accounts that might need a little bit more attention is the “accounts receivable”. Having a sound and well-functioning accounting system is essential for the success of your business. If the customer buys something from you and pays for it immediately it is unnecessary to enter it into the workbook because they owe nothing to you. You can then design a certain product or service that specifically caters to the preferences of these customers.

Also, if you grant a credit back to a customer for such items as returned goods or items damaged in transit, then you also record a credit memo in the ledger. An additional charge to a customer may appear in a debit memo (or in a separate invoice). Since an accounts receivable ledger can give you access to detailed information about a customer’s balance, it’d be easier for you to classify your customers. This is because you’ll be recording all accounts receivable transactions (e.g. credit sales, sales returns, sales discounts, payments) in one account.

Makes it easier for you to understand your demographic

This makes it easier for accountants and bookkeepers to detect discrepancies and errors. After downloading the document and saving it to your computer you can enter your business name into the cell that says [your business name] – just type over the wording. There are some great tips in our computer filing system article to show you how to file your digital documents. My Accounting Course  is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers.

  • An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history of each customer to whom the business extends credit.
  • A typical transaction entered into the accounts receivable ledger will record an account receivable, followed at a later date by a payment transaction from a customer that eliminates the account receivable.
  • The accounts receivable ledger records and organizes purchases made by each customer and tracks the balances of each account.
  • Having a sound and well-functioning accounting system is essential for the success of your business.
  • With it, you can also determine which group of customers pay diligently, and who only pay when they are reminded.

The accounts receivable ledger is a subledger in which is recorded all credit sales made by a business. The ending balance of the accounts receivable ledger equals the aggregate amount of unpaid accounts receivable. The accounts receivable subsidiary ledger shows all the sales made on credit by a business. It provides details on these sales by showing invoice dates and numbers, credit memorandums, payments made against the credit sales, discounts, and returns and allowances.

The accounts receivable ledger control account is used to keep from cluttering up the general ledger with the massive amount of information that is typically stored in the accounts receivable ledger. Immediately after posting, the balance in the control account should match the balance in the accounts receivable ledger. If you were to maintain a manual record of the accounts receivable ledger, it could contain substantially more information. This is something you need to do regularly (maybe even once a week) to avoid landing in financial difficulties because of unpaid sales invoices.

What you get with this Receivables ledger

The Examples sheet in this template shows how to enter the invoice details and the payments, as well as credits and refunds. It can grant you quick access to each customer’s credit balance, as well as all of its related transactions. With it, the business now has a record of each customer’s outstanding balance as opposed to just knowing the total balance that it expects to collect/receive. Lastly, with proper internal controls, the accounts receivable ledger can help in preventing fraud and embezzlement. This makes it easier to track who has already paid and who still owes your business money. These can all be prevented with the accounts receivable ledger and proper internal controls.

accounts recievable ledger

The total balance of the accounts receivable ledger is regularly matched with the balance of the accounts receivable in the general ledger. However, some accounts receivable may also be treated as non-current assets if they are expected to be converted to cash after a year or so. To represent this promise of payment, an asset account is recorded – the accounts receivables. After reading this article, you will be equipped with knowledge about the accounts receivable ledger and why it’s worth it to maintain one. Every time a customer makes a payment, look through the Debtors sheet for their invoice and record the payment and the date it was received.

Examples of accounts receivable ledger

Not only that, it gives you a feel of which services/projects are most profitable, and which demographic usually pays on time. With just the general ledger and journals, it’d be hard to keep track of them individually. Keeping copies like this ensures that if you make any huge mistakes in your current spreadsheet you always have last month’s version to start afresh again. When a customer has fully paid you could hide the row containing the paid invoice to keep only the unpaid invoices to view. With it, you can also determine which group of customers pay diligently, and who only pay when they are reminded. Since access is limited, it’d be relatively easier to pinpoint who’s responsible whenever there is fraud or embezzlement.

Businesses use the account receivable ledger to account for and record every transaction (e.g. sale, payment) for each customer/buyer. In a standard accounting system, the general ledger only contains one main accounts receivable account. This account equals the sum total of all customer account balances at the end of a period. There is no detail the main account to keep the general ledger clean and uncluttered. These steps are completed automatically in some accounting software packages when a user indicates that a period is to be closed. An accounts receivable ledger can also help in the management of a business’s various projects.


As soon as you have updated the Debtors sheet with all the latest customer payments, run your eyes down the list and highlight the ones you need to contact about any overdue accounts. If your business is catering to a lot of customers, say 50 or more, then whether you should maintain an accounts receivable subsidiary ledger or not is a no-brainer – you definitely should. The general ledger is not able to provide this much detail and so having an accounts receivable subsidiary ledger, or any other subsidiary ledger for that matter, is a real benefit to a company’s operations. It can greatly assist in making helpful adjustments to a company’s business model in providing the insight needed to achieve higher revenues and targeted business expansion. An individual customer’s accounts receivable balance will be buried among the hundreds or even thousands of recorded transactions. The primary document recorded in the accounts receivable ledger is the customer invoice.

Each credit purchase recorded in the subsidiary ledger includes a date, description of the purchase, amount, as well as payment terms. The usefulness of the accounts receivable subsidiary ledger lies in the fact that it can show, at a glance, the account status and amounts owed by a specific customer. For example, the general balance may show a total accounts receivable balance of $100,000, but it will not show which customer owes how much.

The formula takes the Total Invoice Due amount and subtracts any payments made already. Tap the download button which will import a copy of the Excel accounts receivable ledger to your device. That way, you can track which customer still owes your business money, and for which job.

The ledger will show, for example, that Customer A owes $15,000, Customer B owes $25,000, Customer C owes $5,000, and so on. Use this free accounts receivable ledger in Excel to enter all your business sales invoices to your customers and to track payments your customers make against them. The total balance of all individual customer accounts in the Accounts Receivable Ledger should equal the balance of the accounts receivable account in the general ledger. This process is called reconciliation and is essential to ensure the accuracy and completeness of the financial records. The information in the accounts receivable ledger is aggregated periodically (anywhere from daily to monthly) and posted to an account in the general ledger, which is known as a control account.

While it isn’t really required for you to maintain an accounts receivable ledger for your business, it is still recommended that you do so. That said, it’s recommended that you assign to at least one employee the responsibility of preparing and maintaining your business’s accounts receivable ledger. If no accounts receivable ledger is maintained, then all transactions will be recorded on the general ledger. Again, it’s important that the total balance of the subsidiary ledger correlates to the accounts receivable balance in the general ledger.