Definition
Accounts receivable (AR) is the money customers owe a business for goods or services already delivered and invoiced on credit.
What is accounts receivable in practice?
AR is an asset on the balance sheet and, for most B2B traders, one of the largest. It grows when you invoice on credit and falls when customers pay. Managing it means invoicing promptly, applying payments to the right invoices and chasing overdue balances.
Example: a distributor issues USD 320,000 of invoices in May on 60-day terms; until customers pay, that amount sits in AR.
Days sales outstanding (DSO) measures how quickly AR turns into cash, and AR aging shows which balances are overdue. AR isn’t the same as revenue: revenue is recognised when you invoice, and the cash arrives later.