Accounts receivable.
aka receivables, trade debtors, AR
Money customers owe you that hasn't landed in your bank account yet.
What it actually means
Accounts receivable is the money customers owe a business for goods or services already delivered but not yet paid for. It usually comes from sending an invoice with payment terms, such as 30 days. On the balance sheet it counts as a current asset, because the business expects to turn it into cash within a year.
Most business to business sales do not work like a shop till. A design studio finishes a project, sends an invoice for $5,000 and gives the client 30 days to pay. From the moment the work is billed until the money arrives, that $5,000 sits in accounts receivable. Finance teams track it closely: who owes what, how long each invoice has been open, and who needs a polite reminder. A common report is the aging schedule, which groups unpaid invoices by how overdue they are.
The nuance people get wrong: receivables are not cash. You can report a strong month of sales and still struggle to pay salaries if customers are slow. Some invoices never get paid at all, so many companies set aside an allowance for doubtful accounts, an estimate of what they may never collect. In the UK you will often hear trade debtors instead. The flip side is accounts payable, which is money you owe others. The exact accounting rules vary by country and standard, but the basic idea is the same everywhere.
Where you'll hear it
Accounts receivable jumped to 80 days. We need to chase the three biggest clients before month end, or payroll gets tight.
Translation: customers are taking far too long to pay, and that delay is now a real cash problem.
Also in month end close, where accountants reconcile what is owed, in sales commission talks, where some companies pay reps only once the customer pays, and in bank lending, where receivables can sometimes be used as security for a loan.
The pop-culture version
Picture this. Tickets for a big concert drop and your friend's card is not working, so you buy both tickets for $200 total. They say they will send you $100 on Friday. You now have a receivable: money that is yours, but not in your account.
Friday comes. Nothing. You send a gentle message. Two weeks later you are wondering if you need to remind them again, and meanwhile you are short $100 for your own rent. On paper you are fine. In your bank app, you are not.
Businesses live this every day, just with more friends and bigger numbers. That is why they track who owes what, send reminders, and sometimes ask for payment upfront.
The practical rule: a sale is not finished until the cash arrives. Watch how long customers take to pay, follow up early and politely, and never plan spending around invoices that have not been paid.
Say it like you mean it
“Revenue looks great this quarter, but a lot of it is still in accounts receivable, so cash is tighter than the sales number suggests.”
It separates billed sales from collected cash, which is the whole point of the term.“We have $50,000 in accounts receivable, so we can spend it on the new office.”
Receivables are promises to pay, not money in the bank, and some of it may arrive late or never.You may hear DSO, days sales outstanding, which measures the average number of days customers take to pay. When someone says we need to collect, they mean turning receivables into actual cash. Factoring is a related idea, where a business sells its unpaid invoices to a finance company to get cash sooner, usually at a discount.
A clear explainer on accounts payable and accounts receivable, covering what each one means, how they appear on the balance sheet and why both matter.
Decoded next
Decoded by the Kurums editorial team. Kurums Decoded translates the language of business for people who are new to it. Definitions are kept short on purpose; the serious version above goes deep. Nothing here is financial, legal or career advice.
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