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Also known as: AR, receivables, trade receivables

Accounts Receivable

ConceptualFinanceOperations

Definition

Accounts Receivable: Accounts Receivable (AR) is money owed to a company by customers for products or services delivered but not yet paid. AR appears as an asset on the balance sheet. Managing AR effectively—through invoicing, payment terms, and collections—is crucial for cash flow, especially in B2B with net-30 or net-60 terms.

Example Usage

“Our AR increased to $500K with enterprise deals. We hired an AR specialist and reduced average collection time from 65 to 40 days.”

Common Misconceptions

AR equals revenue. AR is recorded revenue not yet collected; cash matters more than AR for survival.
More AR means growth. AR increases cash flow risk; collect quickly to fund operations.
Collections happen automatically. Active AR management significantly improves collection rates and timing.

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