What is Meant by Accounts Receivable?
Accounts receivable (AR) refers to the money that a business is owed by its customers after delivering goods or services on credit. In simpler terms, it's the outstanding invoices or payments a company expects to receive in the near future.
These are considered current assets on your balance sheet because they represent future cash inflow.
💡 Example:
Let’s say you run a consulting firm. You complete a project and send an invoice of $5,000 to your client, payable within 30 days. Until the client pays, that $5,000 is part of your accounts receivable.