Account Receivable

What is account receivable? 

 

When you sell goods or service to a customer and allow it to pay at a later date, this is known as selling on credit, and creates a liability for the customer to pay your business. Conversely, this creates an assest for your company, which is called accounts receivable. This is considered a short-term asset, since you are normally paid in less than one year.

 An account receivable is documented through an invoice, which you are responsible for issuing to the customer. The invoice describes the goods or service you have sold to the customer, the ammount it owes you, and when it is supposed to pay you.