Investing term

What is Accounts receivable (A/R)?

Money customers owe the company for goods or services already delivered but not yet paid.

Accounts receivable (A/R) is money customers owe a company for goods or services it has already delivered but not yet been paid for. It sits on the balance sheet as a current asset because the company expects to collect it soon. Watch it relative to sales: if receivables grow much faster than revenue, the company may be booking sales it's struggling to actually collect.

For example

A software firm signs a $1M annual contract in December but gets paid in January — that $1M sits in accounts receivable until the cash arrives.

Accounts receivable (A/R) is taught hands-on in Stage 14 — Reading Financial Statements.

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Related terms

AccrualsAccounting entries that record revenue or expense before cash actually moves.Annual reportThe yearly disclosure that includes audited financials, MD&A, and footnotes — the primary source for serious investors.Balance sheetThe 'photo' statement — what the company owns, what it owes, and what's left for owners, on a single date.Capital expenditures (CapEx)Money spent on long-lived assets — buildings, equipment, software, improvements.
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