Accounts receivable
Financial Accounting glossary · Assets: Cash, Receivables, Inventory, PP&E & Intangibles
Definition
Amounts owed by customers for goods or services sold on credit.
Accounts receivable in plain English
Accounts receivable is the flip side of accounts payable — it's money OTHER people owe YOUR company because you sold them something and let them pay later. You've already done your part (delivered the product or service), so this is a real thing you own: a promise of future cash, which is why it counts as an asset. Imagine you mow three neighbors' lawns and they all say "I'll pay you Friday" — that IOU is your receivable. The risk, of course, is that some customers are slow to pay or never do, which is why companies watch this number closely.
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