accounts receivable
Definition
Accounts receivable is the total money that customers or clients currently owe your business for goods or services you have already delivered but not yet been paid for. Think of it as a running tab of promises to pay that live on your books as an asset until the cash actually arrives in your bank account.
Example
If you run a catering company and you served a corporate lunch last Tuesday and sent the client an invoice for $2,000 that they have not yet paid, that $2,000 is sitting in your accounts receivable.
Watch Out
Accounts receivable counts as an asset on paper, but unpaid invoices do not pay your rent, so chasing slow-paying customers should be a top business priority.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.