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Accounts receivable simply means the money owed by customers (which may include organizations, companies, and corporations) to another business entity in exchange for various goods or services that have been utilized but not paid for. Receivables usually come in the form of lines of credit that have various time periods ranging from a few days to a year.

In the balance sheet of a company, accounts receivable is recorded as an asset since this is a legal obligation for a customer to remit cash for short term debts. On the balance sheet, accounts receivable basically reflects the amount that customers owe the company.

In order to record an entry for a sale on account, the business must debit a receivable and credit a revenue account. Once the account has been paid by the customer, the business debits the cash and credits the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is always debit.

Most companies operate by allowing a certain portion of their sales to be on credit. These types of sales are normally provided to frequent or in some cases, special customers to spare them the hassle of having to physically make payments as each transaction occurs.

Accounts receivables are sometimes not limited to businesses alone. They can extend to individuals as well. For example, workers get receivables from their employers in the form of monthly, bi-weekly, or weekly paychecks. They are legally owed this money for the services they have provided the company.

Though the money tied up with accounts receivable is not available for paying bills, repayment of loans, or for business expansion plans, it is represented as an investment. The actual payoff from an investment in account receivables does not happen until the customers pay their bills.

A lot of big business organizations have accounting computer software to help them perform these tasks, since they may have grown too big to perform such tasks by hand.

Accounts Receivable Factoring provides detailed information on accounts receivable factoring, accounts receivable collection, accounts receivable factoring companies, accounts receivable financing and more. Accounts Receivable Factoring is affiliated with Accounts Receivable Collection.

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