30 Apr 2018

Accounts Receivable (AR)

Finance feed by:

CA Amarendra Agarwal
B.com (Hons),CA
CA in Practice    •    26 Year 7 Month  experience

Accounts Receivable (AR) is the proceeds or payment which the company will receive from its customers who have purchased its goods & services on credit. Usually the credit period is short ranging from few days to months or in some cases maybe a year.

When a company extends credit to the customer, the sale is realized when the invoice is generated, but the company extends a time period to the customers to pay the amount after some time. The time period could vary from 30-days to a few months.

The word receivable refers to the payment not being realized. This means that the company must have extended a credit line to its customers. Usually, the company sells its goods and services both in cash as well as on credit.

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