What is Accounts Receivable (A/R)?
Accounts Receivable are monies owed to a company by their customers (another business, a government entity or individual) for goods or services sold on terms. Accounts receivable are a Current Asset on a company’s Balance Sheet. In most businesses, the “bodies are buried” in the A/R and the inventory. For example, A/R over 90 days past due or of questionable collectability should be moved to Bad Debt so as not to be counted.
Besides cash, A/R is the most liquid asset on a business’ balance sheet and is the most readily monetized via invoice factoring, accounts receivable financing or Asset-based Lending (ABL).