Does sending an invoice count as income right away?

On an accrual basis, yes — the revenue is recognized when the invoice is issued, with the amount sitting in Accounts Receivable until the customer actually pays.

What if a customer never pays an invoice?

That is a bad debt write-off, which reduces this account and typically an expense account rather than revenue. It depends on your accounting method and is worth confirming with an accountant before writing anything off for tax purposes.

1200assetNormal balance: Debitbusiness

1200 — Accounts Receivable

Accounts Receivable is the mirror image of Accounts Payable: instead of what you owe, it is what customers owe you. The moment you deliver work or goods and send an invoice, before a single dollar arrives, that amount belongs here — it is real, it is yours, and it simply has not been collected yet.

As an asset, Receivable carries a normal debit balance. Issuing an invoice debits this account and credits revenue at the same time — which is the key point people miss: on an accrual basis, the sale is recognized when the work is done and billed, not when the customer finally pays. When payment does arrive, it debits Cash or Undeposited Funds and credits this account back down, with no new revenue recognized a second time.

A growing Receivable balance alongside strong reported revenue is worth watching closely — it usually means the business is doing well on paper but is not yet collecting the cash to match, which is exactly the kind of gap that causes a profitable-looking business to run short on cash.

What belongs here

invoices sent to customers that are awaiting payment
the unpaid portion of a partially collected invoice
retainage a customer is holding until a job is fully closed out
a balance still owed after a partial deposit was collected upfront

What does not belong here

money already received, whether in Checking, Cash, or Undeposited Funds — this account is strictly for what has not yet been collected
a deposit collected from a customer before work has started — that is unearned revenue, which this simplified chart does not have a dedicated account for; ask your assistant to flag it in a memo until it is earned
a verbal agreement or signed contract with no invoice issued yet — there is nothing to record until billing actually happens
a personal loan to a friend or family member — this chart is scoped to customer billing, not general lending

Where it shows up

Appears on the balance sheet as a current asset. Compared against revenue, it is one of the clearest signals of how quickly a business is actually turning sales into cash.

Common questions

Does sending an invoice count as income right away?: On an accrual basis, yes — the revenue is recognized when the invoice is issued, with the amount sitting in Accounts Receivable until the customer actually pays.
What if a customer never pays an invoice?: That is a bad debt write-off, which reduces this account and typically an expense account rather than revenue. It depends on your accounting method and is worth confirming with an accountant before writing anything off for tax purposes.