Receivables

Receivables, or Accounts Receivable (AR), represent the amounts owed to a company by its customers for goods or services that have been delivered but not yet paid for. They are recorded as current assets on the balance sheet and play a vital role in evaluating a firm’s liquidity, cash flow, and overall financial stability. Receivables typically arise when businesses extend credit to customers, allowing payment at a later date. Efficient management of AR ensures steady cash inflows and minimizes the risk of bad debts.

Example: If a company sells machinery worth ₹5,00,000 to a client on a 30-day credit term, the amount will be recorded as Accounts Receivable until payment is received.