How should a small business manage accounts receivable and payable?
Receivables are what customers owe you, and payables are what you owe suppliers. Record both when the invoice is raised or received, age them monthly, chase overdue customers, and pay suppliers on agreed terms. Doubtful debts must be assessed at year end.
Accounts receivable (money owed to you)
- Record the sale when you issue the invoice
- Keep an ageing report: current, 30, 60, 90+ days
- Follow up on a fixed schedule, with written reminders
- At year end, review overdue balances; write off those you know are lost and consider an allowance for doubtful ones
- Issue credit notes properly for returns or corrections instead of deleting invoices
Accounts payable (money you owe)
- Record each supplier bill when received, matched against the purchase order or delivery
- Use an ageing list to plan cash and avoid late fees
- Check statements from main suppliers against your ledger every month
- Approve payments with a second person where possible
Year-end cut-off
- Include goods and services received before year end even if the bill comes later (accrual)
- Exclude sales that belong to the next period
Tax note
Whether a bad debt is deductible for tax depends on specific tax rules and evidence; the tax section covers it, and your accountant can advise.
Strong control here directly improves cash flow.
Legal basis
- Companies Act 2016, s.245
- MPERS Section 11 (financial instruments)
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What is the difference between bookkeeping and accounting in Malaysia?Bookkeeping is the day-to-day recording of transactions: sales, purchases, payments and receipts. Accounting uses those records to prepare financial statements, interpret results and support decisions and tax filing. Good bookkeeping comes first, because accounts can only be as reliable as the entries beneath them.
- Is a Sdn Bhd legally required to keep accounting records?Yes. Section 245 of the Companies Act 2016 requires every company, including its directors and managers, to keep accounting and other records that explain its transactions and financial position. This applies even to a new, dormant or loss-making company.
- How long must a Malaysian company keep its accounting records?A company must keep accounting records for seven years after the transactions they record were completed. For tax, documents must be kept for seven years from the end of the relevant year of assessment. Use whichever period ends later.
- What documents should a Malaysian company keep for bookkeeping?Keep every document that proves a transaction: sales and purchase invoices, receipts, bank statements, contracts, payroll records, and records of assets and loans. If a transaction is not supported by a document, it is hard to defend in an audit or tax review.
- Can I keep accounting records and receipts in digital form only?Electronic records are accepted if they are complete, readable, accessible and can be converted into writing. Documents issued electronically, such as e-Invoices, can stay electronic. If you scan a paper original, the Income Tax Act says to keep the paper original as well.