Accounts receivable are:
A current asset representing money due forservices performed or merchandise sold on credit.
Accounts receivable refer to the money that a company is owed by its customers or clients for goods or services that have been sold on credit. It is a current asset on the company’s balance sheet and represents an amount of money that the company expects to receive from its customers within a specific period of time, usually 30 to 90 days. Companies use accounts receivable to manage their cash flow and ensure that they have enough funds to meet their immediate financial obligations, such as paying salaries and bills. The management of accounts receivable is critical for the financial health of a company, and a high rate of uncollected accounts can lead to cash flow problems and even bankruptcy.
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