Accounts receivable (AR) are any balances due from customers, clients, and other debtors for products or services delivered. These are technically lines of credit with specified repayment terms (usually invoices with short-term or long-term due dates). As such, receivables are recorded as assets on the balance sheet.
How Are Accounts Receivable Used?
The accounts receivable department can review AR to help determine things like liquidity and average collection time, metrics that are useful both for a company’s general bookkeeping and understanding a company’s overall financial position.