Accounts receivable is the money a company's customers are yet to pay for its services or goods delivered. On the balance sheet, these are shown as assets to the company. After the invoice is sent to the customer, the accountant enters the amount in accounts receivable. After the customer makes the payment, cash in current assets is increased.
Simply put, accounts receivable are unpaid invoices a firm has or the money a client owes to the firm. These extended credits have different terms that mention the due date for the payments. The dates usually range from a few days to a fiscal or calendar year.
A company's accounts receivable strength can be analyzed by the accounts receivable turnover ratio. This analysis gives an insight into when the money will be received.