what is meant by accounts receivable?

[niyati]

I’ve come across the term accounts receivable while reviewing financial statements but I'm not entirely sure what it means. Can someone explain what accounts receivable is, how it affects a business’s cash flow, and why it's important to manage it well?

 

[jatin]

Accounts receivable refers to the money a business is owed by its customers for goods or services already delivered but not yet paid for. It represents outstanding invoices or bills and is considered an asset on the company’s balance sheet because it will bring in cash in the future.

 

[ankita]

Accounts receivable refers to the money a business is owed by its customers for goods or services delivered on credit. It is recorded as a current asset on the balance sheet. Managing accounts receivable is crucial for maintaining healthy cash flow and ensuring timely customer payments.