Accounts receivable

What is accounts receivable?

Accounts receivable is money customers owe for goods or services already delivered and invoiced but not yet paid. It sits on the balance sheet as a current asset. Most B2B sales create receivables, because customers pay on terms such as 30 or 60 days. Finance tracks receivables by age, because older balances are less likely to be collected.

Why it matters to a revenue leader

Revenue only becomes cash when receivables are collected. A seller who closes a large job with a customer known to pay late has made a sale that costs the company money to carry. In commercial services, retainage on construction work and disputes over change orders often hold receivables open for months. Revenue leaders who review aged receivables with finance learn which customers and which sales habits slow cash down.

An HVAC company has $6 million in receivables. $4.2 million is under 30 days old, $1.2 million is 31 to 90 days old and $600,000 is over 90 days, most of it tied to two disputed change orders on one project. Finance flags the $600,000 as at risk of write-off.