Finance · business glossary
What is Accounts receivable?
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
definition
Money customers owe you for goods or services already delivered but not yet paid for.
Accounts receivable explained
Accounts receivable is money customers owe you for goods or services you have already delivered.
formula
Debtor days = Accounts receivable ÷ Annual credit sales × 365
example
₹10 lakh owed on annual credit sales of ₹60 lakh means customers take about 61 days to pay.
why it matters
Receivables tie up cash. The longer customers take to pay, the more working capital you need.
common mistake
Not following up on overdue invoices quickly, which makes them harder to collect.
Frequently asked questions
What is Accounts receivable?
Money customers owe you for goods or services already delivered but not yet paid for. Accounts receivable is money customers owe you for goods or services you have already delivered.
How do you calculate Accounts receivable?
Debtor days = Accounts receivable ÷ Annual credit sales × 365. ₹10 lakh owed on annual credit sales of ₹60 lakh means customers take about 61 days to pay.
Why does Accounts receivable matter?
Receivables tie up cash. The longer customers take to pay, the more working capital you need.
What is a common mistake with Accounts receivable?
Not following up on overdue invoices quickly, which makes them harder to collect.
Related terms
Accounts payable
Money you owe suppliers or vendors for goods or services you've already received but not yet paid for.
Working capital
The cash tied up in day-to-day operations — inventory and money owed to you, minus money you owe — that keeps the business running between sale and payment.
Cash flow
The actual movement of money in and out of a business, which can differ sharply from reported profit if customers pay late or inventory ties up cash.