Open AR for a professional-services business is the supported balance of posted customer receivables that remains unpaid at the report date. Billing backlog, unbilled sales, work in progress, and invoice proposals may be economically important, but they are not open AR before an invoice posts. Keep the populations linked and separate.
Define the boundary by source object
Microsoft's Project Operations documentation distinguishes billing backlog and project invoice processing from posted customer invoices. The exact workflow varies by system and firm, but the forecasting control is stable:
| Population | Evidence | AR forecast treatment | | --- | --- | --- | | Billing backlog | Billable transactions or work awaiting invoicing | Track as an upstream action queue. | | Invoice proposal | Draft review object before posting | Keep outside open AR until approved and posted. | | Posted invoice | Issued customer receivable with an open amount | Reconcile into the AR forecast population. | | Payment | Applied receipt or other observed payment record | Reduce the open balance once. |
The unbilled-sales guide explains the broad distinction. The invoice-proposal guide covers the intermediate review state.
Build a backlog-to-invoice bridge
For material backlog items, capture the project or customer, service period, billable amount, billing rule supplied by the business, readiness status, blocker, owner, and next review date. When an invoice posts, link those source items to the issued invoice ID and reconcile the amount transferred.
The bridge must prevent two errors. First, do not count backlog and its resulting invoice in the same collections total. Second, do not drop a backlog item merely because it is not AR; keep it visible as a billing action when it matters to near-term cash planning.
If the posted invoice differs from the backlog amount, record the observed difference instead of assuming it is an error. Scope changes, credits, taxes, retainage, or other documented factors may affect the amount, but each explanation needs source evidence.
Answer the common open-AR question directly
Include a posted invoice's verified remaining balance in open AR even when the related service period, project work, or revenue schedule is different. Exclude an unposted proposal or billing-backlog item from the AR control total. Track it in an upstream billing queue if it could affect near-term cash planning.
Do not combine backlog and open invoices into one `receivables` total without labels. That presentation can count the same value twice when backlog later becomes a posted invoice. A clean bridge uses a backlog or proposal identifier, the resulting invoice identifier, the amount transferred, any documented difference, and the posting date.
Use separate timing assumptions
A target billing date is not an expected collection date. After posting, assign a collection week from the invoice's current balance, due date, delivery evidence, buyer requirements, disputes, and commitments. The due-date versus collection-date guide explains that second decision.
This separation also improves accountability: project operations can own billing readiness, while finance owns reconciliation and the cash assumption. One named owner may fill both roles in a small firm, but the statuses should remain distinct.
Decision rule
Keep billing backlog outside open AR, preserve it as an upstream action queue, and transfer value into the collections forecast only through a reconciled posted invoice. Professional-services teams can use the AR Pulse example to see how posted receivables become source-linked actions without treating unbilled work as collected or collectible cash.
The professional-services cash-flow forecast guide carries this boundary into a weekly management range with invoice evidence, owners, actions, and actual-receipt reconciliation.