Accounts receivable (AR)
Also called receivables
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is accounts receivable (AR)?
Accounts receivable (AR) is the money customers owe a company for goods already delivered and invoiced but not yet paid for. Because most distribution customers buy on credit terms, AR is one of a distributor’s largest assets, alongside inventory.
How it works
The credit team works from an AR aging report, which sorts each customer’s unpaid invoices by how old they are, such as current, 1–30 days past due and 31–60 days past due.
Accounts receivable (AR) example
A contractor buys $8,000 of material on net 30 terms. That $8,000 sits in accounts receivable until it is paid, and after day 30 it moves into the past-due columns of the aging report.
Related terms
- Accounts payable (AP)Accounts payable (AP) is the money a company owes its suppliers for goods and services it has received but not yet paid for.
- Net termsNet terms are payment terms that give a business customer a set number of days after the invoice date to pay the full amount, such as net 30 or net 60.
- Days sales outstanding (DSO)Days sales outstanding (DSO) is the average number of days a company takes to collect payment after a sale.
- Credit holdA credit hold is a block a distributor puts on a customer’s account, or on a single order, so that nothing ships until the credit department releases it.
- InvoiceAn invoice is the seller’s bill for goods or services delivered, listing the items, quantities, prices, freight, tax, payment terms and amount due.
