How to Record Accounts Receivable and Payable in Hong Kong

Accounts receivable (AR) is money customers owe you. Accounts payable (AP) is money you owe suppliers and others.

Receivables

1. Issue numbered invoices and record them in the sales ledger when issued.
2. Record receipts against the specific invoice.
3. Run an ageing report (current, 30, 60, 90+ days) every month and follow up.
4. At year end, review old balances with your accountant. Amounts unlikely to be collected may need an allowance or write-off under the accounting standard you use.

Payables

1. Record each supplier bill with its due date.
2. Match bills to purchase orders or delivery notes before paying.
3. Pay on due dates and record payments against the bill.
4. Keep a list of expenses incurred but not yet billed (accruals), such as utilities or professional fees.

Why it matters legally. Section 373 requires a record of the company's assets and liabilities, and the IRD expects records that let profits be worked out, including for services or goods sold. AR and AP records are how you evidence both.

Keep supporting documents (invoices, delivery notes, statements) for the seven-year retention period.