Accounts Receivable
Also called: AR, debtors, trade receivables, sundry debtors
What is Accounts Receivable?
Accounts receivable is the total owed to a business by customers for goods or services already supplied on credit. It is an asset, and it is the money your business has effectively lent to its customers.
Why Accounts Receivable matters
Receivables are the most common cash trap in small business. Every rupee outstanding is a rupee you have financed, and the longer it ages the less likely it is to be collected in full.
Accounts Receivable formula
Days sales outstanding = Accounts receivable ÷ Credit sales × Days in period
Rising DSO means collections are slipping even if sales look healthy.
How Accounts Receivable works in practice
Age receivables by bucket and chase by age rather than by size. Statements sent monthly and a call at the first missed due date recover more than any letter sent at ninety days.
Frequently asked questions
Shorter stated terms, invoices sent the same day, a payment link on the invoice, and consistent follow-up from day one past due.