Accounts receivable

Accounts receivable (AR) represents the outstanding invoices or money owed to a person or business by customers who have received goods or services on credit. It is essentially a record of short-term obligations from clients and is considered a current asset on the balance sheet, as the expectation is that it will be paid within a relatively short time frame.

AR is the opposite of accounts payable, which tracks what a company owes.

Also referred to as “trade receivables,” accounts receivable is critical to a company’s cash flow and financial health. Monitoring AR helps businesses manage credit risk and ensure timely collections from customers.