Receivables
Also called: trade receivables, debtors, accounts receivable
Money owed to a business by customers who have bought on credit and not yet paid.
When a business sells on credit, the sale is recorded as revenue and the amount owed appears on the balance sheet as receivables, a current asset. When the customer pays, receivables fall and cash rises.
Receivables growing much faster than sales can be a warning sign: customers may be slow to pay, or sales may be recorded too early.
Learn more in these lessons
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- Accrual accounting and cash accountingWhat is the difference between accrual and cash accounting?
- Working capital, inventory and receivablesWhat is working capital and why does it matter?
- Working capital efficiencyHow can working capital trends warn you about a company's health?
- Analysing financial statements in practiceHow do you turn several years of annual reports into real understanding?
- Identifying red flags in practiceHow do you find warning signs in a company's filings and judge how serious they are?
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