Account receivable is a term that is commonly used in the financial world. It is a concept that is essential for businesses of all sizes, as it represents the money that is owed to them by their customers. In this article, we will explore the definition and meaning of account receivable, its origin, and its associations.
Definitions
Account receivable is a term that is used to describe the money that a company is owed by its customers for goods or services that have been provided. It is an asset on the company’s balance sheet, and it represents the money that is expected to be received in the future.
According to Investopedia, account receivable is “a legally enforceable claim for payment held by a business for goods supplied and/or services rendered that customers or clients have ordered but not paid for.”
Origin
The origin of account receivable can be traced back to the early days of commerce. In the past, businesses would keep track of their accounts using ledger books, which would record all the transactions that took place. These books would include information about the goods or services that were provided, the amount that was owed, and the date on which payment was expected.
As businesses grew and became more complex, the need for a more sophisticated system to manage their accounts became apparent. This led to the development of accounting software and other tools that are used today to manage account receivable.
Meaning in different dictionaries
The meaning of account receivable is consistent across different dictionaries. According to Merriam-Webster, account receivable is “an amount of money that a company has a right to receive because it has provided goods or services to a customer.”
The Oxford English Dictionary defines account receivable as “an amount of money owed to a business by a customer for goods or services provided.”
Associations
Account receivable is closely associated with other financial terms, such as accounts payable and cash flow. Accounts payable refers to the money that a company owes to its suppliers for goods or services that have been received but not yet paid for. Cash flow refers to the movement of money in and out of a business.
Account receivable is also associated with credit management, as it is important for businesses to manage their accounts receivable to ensure that they are paid on time and to avoid cash flow problems.
Synonyms
Some synonyms for account receivable include:
- Debtors.
- Trade receivables.
- Customer receivables.
- Sales on credit.
Antonyms
There are no antonyms for account receivable, as it is a specific financial term that does not have an opposite.
The same root words
There are no root words for account receivable, as it is a specific financial term that does not have a broader meaning.
Example Sentences
Here are some example sentences that use the term account receivable:
- Our account receivable has increased significantly this quarter due to the increase in sales.
- We need to improve our credit management to ensure that our account receivable is paid on time.
- The company’s account receivable is a significant asset on its balance sheet.
- We need to review our account receivable to identify any overdue payments and take action to collect them.