Receivable
A receivable (or "accounts receivable") is money owed to your business by customers for goods or services you've already delivered. When you send an invoice with payment terms like "net-30," the amount becomes a receivable — an asset on your balance sheet representing future cash inflow. Receivables
Receivable Definition
A receivable (or "accounts receivable") is money owed to your business by customers for goods or services you've already delivered. When you send an invoice with payment terms like "net-30," the amount becomes a receivable — an asset on your balance sheet representing future cash inflow. Receivables are the flip side of payables.
Receivable in Practice — Example
A marketing agency completes a $8,000 website redesign for a client and sends an invoice with net-30 terms. The moment that invoice is sent, the agency records $8,000 in accounts receivable. It's revenue on the P&L and an asset on the balance sheet. When the client pays 22 days later, the receivable clears — accounts receivable decreases and cash increases by $8,000.
Why Receivable Matters for Your Books
Receivables represent real money coming your way — but it's not cash yet. This is one of the most important distinctions in small business accounting. You can be profitable on paper and still run out of cash if your receivables aren't collected on time.
Managing receivables directly impacts cash flow. If your average collection period is 45 days but your bills are due in 30, you have a cash gap. Monitoring your accounts receivable aging report helps you spot slow-paying clients before they become bad debts.
Receivables also affect your financial ratios. Lenders look at your receivables turnover to assess how efficiently you collect. A high receivable balance relative to revenue could signal collection problems — or just long payment terms. Either way, it's worth managing actively.
How Receivable Shows Up in QuickBooks
In QuickBooks Online, receivables are created automatically when you send invoices. View them under Sales → Invoices (filter by "Open" or "Overdue"). Run the Accounts Receivable Aging report to see receivables grouped by how long they've been outstanding (current, 1-30 days, 31-60 days, 61-90 days, 90+ days). The Balance Sheet shows total A/R under Current Assets. Send payment reminders directly from QBO for overdue invoices.
Common Mistakes
FAQ
Q: What if a customer never pays? A: After exhausting collection efforts, you'd write off the receivable as a bad debt expense. This removes it from your assets and recognizes the loss. See "write-off" and "uncollectible account" for more details.
Q: Are receivables considered income? A: Under accrual accounting, yes — the revenue is recognized when earned (when you deliver the service/product), regardless of when payment arrives. Under cash basis, you'd only record income when the payment is received.
Related Terms
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Related Terms
A cost incurred in the ordinary course of running a business. Deductible business expenses reduce taxable income.
A reimbursement is a payment made to an employee, contractor, or partner to repay them for out-of-pocket business expenses they paid with their own money.
Bad debt is money owed to your business that you've determined is uncollectible — a customer who can't or won't pay their invoice. When you write off bad debt, you remove it from accounts receivable and record it as an expense, acknowledging that the revenue you recognized will never turn into cash.
A turnover ratio measures how efficiently a business uses its assets by comparing the rate at which assets are converted to sales or cash. Common turnover ratios include inventory turnover (how quickly inventory sells), accounts receivable turnover (how quickly customers pay), and accounts payable t
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