To turn “I sold well but have no cash” into a number you can act on, list every credit sale you have not been paid for. Beside each one, write the buyer, the amount, the invoice date, the due date and the days past due. A sale made on credit is written down as a sale and then leaves your view, because the sales sheet records that the sale happened, not whether the money came in.
The receivables list is a second page that carries only the sales still waiting to be paid, so what you are owed, by whom, and since when, stops being a feeling and becomes a figure with a total at the foot of it.
A farm can write every sale down, keep its money apart from the family’s and check the balance against the bank statement, and still keep no page for the credit sales that have not been paid. A credit sale is recorded as income the day the grain leaves, but the money stays with the buyer, and a late payment tends to be noticed only once it is long overdue, well after the day you could have called about it.
Why does a sale you wrote down still leave you short of cash?
A sale you wrote down leaves you short of cash when it was made on credit, because writing it down records that the sale happened, not that the money arrived. A credit sale is income on paper the day you deliver and cash only later, if at all.
Mississippi State University’s balance-sheet guide puts the accounting plainly, that accounts receivable is “any items or services that have been provided but not yet paid for”, and that if a farmer has “delivered grain but has not received payment for that grain yet, the transaction is posted to accounts receivable until payment is received”. Until the money lands, the sale is real and the cash is not, and that difference is what you are still owed.
What is a receivable, and why is it not on the sales sheet?
A receivable is a sale you delivered and were not paid for, money that exists on paper and not yet in the account. Ohio State University Extension counts accounts receivable among a farm’s “current assets”, the things that turn into cash within a year, and treats “other income yet to be received as accounts receivable”. The sales sheet does not separate it, because the sheet’s task is to record that a sale happened. Having every sale written down tells you what you sold and to whom. It does not tell you which of those sales is still unpaid, and that is the one line the receivables list adds.
What goes on the receivables list?
The receivables list is one line per unpaid credit sale, carrying five things: the buyer, the amount, the invoice date, the due date and the days past due. The buyer ties the line to the document that carries the same name, the invoice you issued. The amount is what is owed on that sale. The invoice date and the due date fix when the clock started and when payment was promised, and the days past due is the difference between the due date and today.
At the foot of the list sits one total, the money you have sold and not yet collected, which is the figure the running sense of “selling well” never shows you.
Why the due date and the days past due, and not just the amount?
The due date and the days past due are what let you act before a debt goes cold, which the amount alone cannot do. A total of what you are owed is a single number. A list sorted by days past due is a queue, with the oldest overdue sale at the top, and reading it you see the buyer to call today rather than the one whose payment is merely near. The overdue sale that catches you out is always the one nobody put on a dated line, because a debt with no date attached ages in silence. The dated line is the whole difference between finding out now and finding out once the buyer has moved on.
When does a receivables list mislead you?
A receivables list misleads you when you read it as cash already in, because a receivable is money owed, not money collected. On the list you see what you have sold and not been paid for, with no guarantee that the buyer will pay. Interest on a late payment follows the terms you agreed with the buyer, and how much of the list may never be collected is a question for your accountant.
The list is also only as complete as the sales record behind it, since it is drawn from that record and inherits its gaps: a credit sale that never reached the sheet is not on the receivables list either, and knowing that edge is what keeps the total from being read as the whole of what you are owed.
Revenue grew, but did the cash come in?
Revenue and receivables can rise together, so a growing revenue line is not, by itself, cash in hand. Sell more on credit and you lift both the revenue you record and the money still owed to you, and the year looks bigger while the bank balance does not grow at the same pace.
A rising total sold tells you the farm is busy. The receivables list tells you how much of that total is still outside the gate, and that is the part of “we sold well” that decides whether there is money to plant the next crop.
Why is the list worth making only if you act on it?
A receivables list earns its afternoon only when you act on each overdue line, not when you file it. Kahan’s FAO overview of market-oriented farming warns that “there is no value in spending time on records and calculations of profit and production for individual enterprises if no use is made of them”. What the list drives is concrete: the overdue buyer to call, the one to ask for cash next time instead of credit, the terms to tighten on the sale that always comes in late. Patuzzi and colleagues place the record of payables and receivables as they change among the ordinary financial controls a farm keeps, alongside costing and price.
To be sure a receivable was paid, you need to see the payment arrive in an account you can check. That is easier when the farm has its own account, apart from the family’s, so a buyer’s payment is not lost among household transfers, and when you check that account’s balance against the bank statement. Comparing what you sold with what actually came in, and acting on the gap, is everyday work in managing a farm as a business; more on farm money is in the finance section of the library.
Where to start
It takes an afternoon with your sales sheet, the page where each sale is written with its date, buyer and amount, and the invoices you issued. If you keep no sales sheet, the invoices alone will do. Nothing here needs a system or a bookkeeper, only the sales you already made and the paper you already have.
The total at the foot of the list is the money the farm has earned and does not yet hold. A small one, aging slowly, is a farm whose sales and cash are nearly the same thing. A large one, full of old lines, is a farm carrying its buyers’ unpaid bills on its own back, and the list is where you find out whose, and for how long, before the next load goes out on the same terms.