Accounts receivable is a phrase referring to a company’s invoices that are not yet paid at the time of reporting. Similar to a line of credit extended to a customer, accounts receivable serves as a payment agreement between a company and their client. Though specific terms vary, an account receivable is typically set to be paid anywhere from one day to one year of the invoice date.
A broader accounts receivable definition refers generally to any money owed to a company – any unpaid invoices define accounts receivable of a company.
Accounts receivable management is an integral part of a company’s accounting practices. Offering sale on credit to customers can help foster healthy business relationships with repeat buyers while avoiding the hassle and paperwork of frequent invoicing.