You made the sale and sent the invoice—but when does the money actually reach your account, and what happens when it doesn't? Dynamics 365 Accounts Receivable connects customer accounts, invoices, payment terms, incoming payments, settlement, credit management, collections, disputes, and overdue balances inside Dynamics 365 Finance. In this episode of M365 FM, Mirko Peters follows one customer balance from the original sale through invoicing and payment—and shows what happens when payment arrives late.

WHAT IS DYNAMICS 365 ACCOUNTS RECEIVABLE? 
Accounts Receivable tracks money customers owe the business and the payments received against those debts. Think of it as a financial filing cabinet. Every customer has a folder containing invoices, payments, due dates, payment terms, credit information, and follow-up activities. A spreadsheet can list outstanding invoices. Dynamics 365 Finance goes further by connecting those invoices with sales transactions, customer agreements, bank payments, credit decisions, and collection activities. The result is a connected view of the financial relationship with each customer.

THE CUSTOMER ACCOUNT
Every Accounts Receivable process begins with the customer account. The customer account contains more than contact information. It defines many of the financial rules governing how the organization does business with that customer. That can include the invoice address, payment terms, payment method, credit limit, customer group, and other financial settings. For example, products might be delivered to a customer's factory while invoices are sent to its finance office. Dynamics 365 can maintain those differences as part of the customer relationship.

PAYMENT TERMS AND DUE DATES
Payment terms answer a straightforward question: How long does the customer have to pay? One customer might pay immediately, another within 30 days, and a larger customer might negotiate 60-day payment terms. Once those rules exist on the customer account, Dynamics 365 can use them when calculating invoice due dates. Employees don't need to search through email conversations every time an invoice is created to determine what was agreed with the customer.

CUSTOMER CREDIT LIMITS
A credit limit defines how much the organization is willing to let a customer owe at one time. A strong customer relationship doesn't automatically mean unlimited financial exposure. If a customer already has a substantial outstanding balance and places another large order, Dynamics 365 can help finance and sales determine whether the new transaction requires additional attention. Credit limits therefore establish agreed financial boundaries before unpaid balances become larger problems.

CUSTOMER GROUPS AND POSTING PROFILES
Customer groups allow organizations to organize customers with similar characteristics. Retail customers might belong to one group while wholesale customers belong to another. Posting profiles handle an accounting requirement behind the scenes. They determine which financial accounts should record customer debt when transactions are posted. Employees outside finance might rarely interact with these configurations, but they help ensure customer transactions reach the correct places within the organization's financial records.

FROM SALES ORDER TO CUSTOMER INVOICE
An order and an invoice aren't the same thing. A sales order records what the customer wants to purchase. An invoice establishes what the customer needs to pay. When the invoice is posted, Dynamics 365 creates an open balance against the customer account. Accounts Receivable can then track that amount until payment closes it or somebody needs to take action.

INVOICING FROM SALES ORDERS
Many customer invoices originate directly from sales orders. Because the sales order already contains information about the customer, products, quantities, prices, and other agreements, finance doesn't need to recreate those details inside a separate billing system. Depending on the organization's process, invoicing might happen when products ship or when another agreed billing milestone occurs. The important point is that the invoice remains connected to the underlying business transaction.

PACKING SLIP INVOICING
Sometimes an organization wants to invoice based on what actually shipped rather than everything originally ordered. Imagine a customer orders ten units but only eight are currently available. If eight units ship, invoicing based on the confirmed delivery information allows the organization to bill for those eight rather than charging the customer for products that haven't yet been delivered. This creates a closer connection between warehouse execution and financial billing. 

FREE TEXT INVOICES
Not every invoice begins with a sales order. An organization might need to invoice a customer for training, a service charge, a project-related fee, or another one-off amount. Dynamics 365 Finance supports free text invoices for these situations. Despite the name, th...