Accounting technology / Glossary / Sales ledger

What is a sales ledger?

Definition

The sales ledger is the sub-ledger that records every customer's account: the invoices issued to them, credit notes, payments received and the balance still owed. Its total is the trade receivables figure in the general ledger. The term is common in the UK and Commonwealth; in the US the same records are usually called the accounts receivable ledger.

Also calledaccounts receivable ledgerdebtors ledgercustomer ledger

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Records: Customer invoices, credits, payments
Total equals: Trade receivables in the general ledger
US name: Accounts receivable ledger

How the sales ledger works

Each customer has an account in the sales ledger. Raising an invoice debits the customer's account; a credit note or payment credits it. When cash arrives, it is allocated to the invoices it settles, which is the cash application step. The ledger produces customer statements and the aged debt report, which sorts each balance by how long it has been outstanding and drives credit control. In the general ledger, only the total appears, in the trade receivables control account, which is reconciled to the sales ledger at month end. Sales ledger work covers invoicing, allocating receipts, resolving queries and chasing overdue accounts; receivables automation software now handles much of the matching and chasing.

Common questions

What is the difference between the sales ledger and accounts receivable?+

Accounts receivable is the amount customers owe, and the function that manages it. The sales ledger is the record of each customer's account that adds up to that amount.

What does a sales ledger clerk do?+

Raises invoices and credit notes, allocates customer payments to invoices, answers billing queries, sends statements and reminders, and reconciles the ledger to the general ledger.

What is an unallocated payment?+

Cash received from a customer that has not been matched to specific invoices, often because the remittance is missing. It sits on the account until it is applied, which can make debts look overdue when they are not.