Back to Glossary
Accounting Terms
Accounts Receivable
Definition
Money owed to a business by its customers for goods or services delivered but not yet paid for.
Overview
Accounts receivable (AR) represents outstanding invoices—money you've earned but haven't collected. Managing AR is crucial for cash flow and business health.
Example
A consulting firm has $50,000 in accounts receivable from five clients with unpaid invoices.
Best Practices
Track AR regularly, follow up on overdue invoices, and maintain an aging report.
Common Mistakes to Avoid
Not tracking AR
Slow follow-up on overdue invoices
Poor record-keeping
Frequently Asked Questions
How do I reduce accounts receivable?
Invoice promptly, offer early payment discounts, and follow up consistently on overdue payments.