Accounts Receivable (AR)
Definition:
The money a company is owed by its customers for goods or services sold on credit.
AR also refers to the department or team responsible for managing customer invoices and ensuring timely payment.
Example:
Acme Corporation sold $15,000 worth of products to Skyline Industries on credit, with payment due in 30 days (Net Terms - specifically Net 30 Terms). The Accounts Receivable team at Acme Corporation is responsible for generating and sending the invoice to Skyline Industries, monitoring the payment status, and following up on any overdue payments to maintain a healthy cash flow.