What Is Accounts Receivable (AR)?
Accounts Receivable (AR) is the money owed to a company by its customers for goods or services delivered or used but not yet paid for. Accounts receivable are considered an asset on a company’s balance sheet because it represents money that will be received in the future.
Companies typically offer customers credit terms that allow them to pay for their purchases over time. For example, customers may be given 30 days to pay their bill in full. The customer’s invoice will show the date that payment is due and any discounts they will receive if they pay early.
The accounts receivable department is responsible for managing the credit and collections process. This includes sending invoices to customers, following up on late payments, and issuing refunds or credits when necessary.
