Accounts receivable

Accounts receivable includes all of a company’s receivables from customers: invoices that have been issued but not yet paid. It appears on the asset side of the balance sheet.

Example

A company with annual revenue of 6 M€ and a DSO of 60 days has approximately 1 M€ tied up in accounts receivable.

Why It’s Important

Accounts receivable often account for a significant portion of the balance sheet and working capital requirements. Managing them effectively (issuing invoices promptly, following up on payments, and resolving disputes) frees up cash flow.

For more information: The Basics of Accounts Receivable Management and the Credit Management Guide.

See also: accounts receivable, outstanding customer balances, accounts receivable accounting.