Accounts receivable refers to the money that a company is owed by its customers for goods or services provided. It is an important aspect of a business's financial health, as it represents the company's expected income. When a business sells goods or services on credit, it creates accounts receivable, which are recorded as assets on the balance sheet. It is crucial for businesses to manage their accounts receivable effectively to maintain a positive cash flow and avoid financial difficulties. By keeping track of accounts receivable, businesses can ensure timely payments from their customers and maintain a healthy financial position.
