Accounts receivable

Accounts receivable

A company lives from consistently having sufficient liquidity to finance its day-to-day business. A key aspect in this context is the accounts receivable balance. It denotes the stock (= number or total) of outstanding, i.e. unpaid invoices for goods or services already provided.

As different payment terms are sometimes agreed on with customers, returns or complaints are added as well as other risks. The accounts receivable balance serves primarily as an indicator. It can be used, for example, to determine whether there is currently a deviation from the average value of outstanding invoices - and also to identify a requirement that the company needs to finance from other sources.

Note: The accounts receivable balance can provide both qualitative information (improvement in payment behavior over time, etc.) and quantitative information (amount of outstanding invoices, etc.).

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Accounts receivable

Image: pluie_r / Shutterstock

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