What Are Accounts Receivable?

Accounts receivable (AR) refers to the money owed to your business by customers for products or services that have been invoiced but not yet paid. It represents outstanding customer balances and is a key part of managing cash flow.

Accounts receivable tracks who owes you money and how much.

What Accounts Receivable Includes

Accounts receivable focuses on monitoring customer payments and outstanding balances, including:

Invoice tracking – Monitoring issued invoices and unpaid balances

Payment application – Recording customer payments accurately

Aging review – Tracking how long invoices remain unpaid

Customer balance management – Maintaining up-to-date customer account records

Discrepancy resolution – Identifying and correcting billing or payment issues

Reporting support – Ensuring accounts receivable balances are reflected accurately in financial reports

Why Accounts Receivable Matters

Effective accounts receivable management helps businesses:

  • Improve cash flow and payment timing

  • Reduce overdue and uncollected invoice

  • Maintain accurate customer records

  • Support reliable financial reporting

Accounts receivable ensures your business gets paid. A well-managed AR process keeps cash flowing, customer balances accurate, and financial records reliable.