What is Accounts Receivable
Accounts receivable is the money a business is owed by customers for products or services they have already received but have not yet paid for.
When a business sells a product or service on credit, the customer usually gets time to make the payment. The amount the customer owes is recorded as accounts receivable. For example, if a company provides a service worth $2,000 and allows the customer to pay within 30 days, the $2,000 is recorded as accounts receivable until the payment is received
Accounts receivable is recorded as a current asset because the business expects to collect the money, usually within a short period. Tracking accounts receivable helps businesses manage incoming payments, maintain cash flow, and follow up on overdue invoices. Once the customer pays, the amount is removed from accounts receivable.