What are accounts receivable (AR)?

In a nutshell

Accounts receivable (AR) are legally enforceable claims for payment due to a firm for goods or services delivered but not yet paid for by customers. Accounts receivable are a form of current asset.

Examples

• An electric company records an account receivable for unpaid invoices as it waits for its customers to pay their bills.
• Jim, an IT contractor, records an accounts receivable for 1 week’s worth of work as he waits for the company that hired him to pay the invoice.

Key characteristics

• Due to a company in the short term (typically within 12 months).

Sources

• Accounts receivable – Investopedia