Accounts receivable (AR) is the money owed to a business by its clients for goods or services that have been delivered or invoiced but not yet paid. It is recorded as an asset because it represents cash the business expects to collect.
In plain terms
Tracking receivables tells a firm who owes what and how overdue it is, which is essential for healthy cash flow.
Example
A firm issues a PKR 20,000 invoice; until the client pays, that amount sits in accounts receivable.
Why it matters
Managing AR well means getting paid faster and avoiding cash-flow gaps caused by unpaid invoices.
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