Why it matters
Accounts receivable is cash the business has earned but not collected. A growing receivable balance can hide a cash problem, and an old receivable may need to be written off.
Example
A business invoices a customer $8,000 in December and receives the payment in February. At year end, the invoice is in accounts receivable, and the revenue belongs to December under accrual accounting.
Related terms
Questions about Accounts receivable
What is an accounts receivable aging?
An aging report groups unpaid invoices by how long they have been outstanding, such as current, 30 days, 60 days and 90 days. It shows which customers are late and which balances may not be collectible.