Accounts Receivable

Ron explains in 60-seconds with no BS

So what are accounts receivable, really?

Accounts receivable (A/R) is the money your business is owed. You’ve done the work, sent the invoice, and now you’re waiting for payment.

That unpaid money is considered an asset, even if it’s still floating in limbo between “soon” and “never.” A/R shows up on your balance sheet because it’s technically yours - it’s just not in your account yet.

Tracking it is crucial for cash flow, especially if you’re running lean. Let it slide too long, and you’re basically giving out interest-free loans. The better you manage receivables, the more stable your business becomes.

Accounts receivable: where hope and accounting meet... and wait… and wait.

How people actually use it in a sentence...

“Amanda said business was great, but with 47 outstanding invoices, her accounts receivable was basically a pile of IOU’s filed in the ‘Soon, I promise’ folder.”

Did you know...

In 1982, IBM introduced the first automated accounts receivable system to help businesses collect faster. It was built to replace the paper-chase of mailed invoices and phone tag.

Four decades later, most of the small businesses in the world are still waiting on checks like it's 1981.