Definition
Accounts receivable refers to the amounts a business is owed by customers for goods or services that have been delivered but not yet paid for. It represents a short-term asset on the company’s balance sheet.
Related Services
Services related to accounts receivable include credit management, invoicing, collections, and cash flow consulting. Accounting software and financial services often help businesses manage their receivables efficiently by automating invoicing and tracking payments.
Problem and Application
Poor management of accounts receivable can lead to cash flow issues and increased risk of bad debt. Companies need to monitor outstanding receivables, follow up on overdue payments, and ensure timely collections to maintain liquidity and avoid financial strain.
Conclusion
Accounts receivable is an essential part of a company’s working capital. Proper management of receivables helps businesses maintain healthy cash flow, reduce the risk of bad debts, and ensure financial stability.
