Accounts receivable
Money your customers owe you for goods or services already supplied but not yet paid for.
What it means
Accounts receivable (often shortened to AR, or called trade debtors) is the total your customers owe you for goods or services you have already delivered on credit. It sits as an asset on your balance sheet until the money is collected or written off.
A large or growing receivables balance ties up cash you have effectively already earned. Watching it closely — and acting early on overdue accounts — is one of the most direct ways to protect day-to-day cash flow.
Keeping it healthy
Healthy receivables come from clear terms of trade, prompt invoicing and consistent follow-up. The longer an invoice stays unpaid, the harder it usually is to recover. You can model the cash cost of slow payers with our free calculators and see related terms such as debtor days.
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