Definition: Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivables are listed on the balance sheet as a current asset.

In Plain English: Accounts receivable is any amount of money owed by customers for purchases made.

Example: You performed $50 worth of services for a customer on October 1st but they did not pay for those services until October 31st. Your accounts receivable in the middle of the month would show that $50 of payment is outstanding.

It’s important to understand the effect that accounts receivable can have on your company’s cash balance. If payment is being delayed for too long, you could run into cash flow issues.