What is accounts receivable?

Accounts receivable (definition)

Accounts receivable are invoices owed to you by customers. They’re sometimes called receivables, trade debtors, or AR.

It might help to think of accounts receivable as a sales invoice that your customer hasn't paid yet. Let’s say you sell your product to a customer on credit and send them an invoice for the sale. The amount your customer owes you from that invoice is part of your accounts receivable. In your customer's records, that invoice will be part of their accounts payable. In this way, accounts payable and accounts receivable are two sides of the same transaction.

Accounts receivable might also refer to a person or team in charge of receiving or chasing up payments owed to your business. Your 'accounts receivable' might want to talk to a customer who is overdue on their payment to you.

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This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.