1. Trade receivable (most common): the amount a customer owes the business after an invoice is issued. Until the invoice is paid, it is recorded as a trade receivable on the company’s balance sheet (account 411 "Trade receivables").
2. Civil receivable: amount owed outside commercial activity, e.g. unpaid rent, a personal loan, or an unreimbursed deposit. Less common for SMEs but can occur (loan to a partner, deposit paid, etc.).
3. Tax receivable: amount owed by the tax authorities to the business. The most common in SMEs is input VAT that the state must refund when it exceeds output VAT (typical in early business stages or during investment periods).
In French accounting, a trade receivable is recorded as soon as the invoice is issued (not upon receipt) — this is the accrual accounting principle.
Standard entry when issuing an invoice (net €1,000, VAT 20%):
Entry upon receipt:
If the customer never pays: the receivable becomes doubtful (account 416) then uncollectible (provision then loss). Proper management is crucial to avoid overstating assets and taxable profits.
Friendly and legal collection typically follows 4 steps:
Good invoicing software automates friendly reminders (step 1) and pre-fills formal demand letters. Without this, an SME typically leaves 10–15% of its turnover unpaid.
Discover the Orizen answer: Orizen invoicing software, modular and built for French SMEs.
Essai gratuit 14 jours What the Orizen invoicing software module costsIn B2B (between businesses), the limitation period is 5 years from the day the obligation arose (Article L.110-4 of the French Commercial Code). In B2C, it is 2 years from the day the creditor knew or should have known the facts (Article L.218-2 of the French Consumer Code). After this period, the debt is legally extinguished—it becomes impossible to enforce payment through legal means.
A receivable and a debt refer to the same transaction from each party’s perspective: a receivable for the creditor (the party owed money) = a debt for the debtor (the party that owes). If you issue a €1,000 invoice to a client: it is a receivable in your accounting (you expect payment) and a debt in theirs (they must pay).
Four key levers: (1) Check the customer’s solvency before signing (Pappers, Société.com); (2) Request a deposit (30% on order, 70% on delivery); (3) Shorten payment terms (30 days net instead of 60 or 90); (4) Automate reminders from the first day of delay using invoicing software. A well-equipped SME can reduce its unpaid rate from 10-15% to 2-4%.