Legal Definitions - A/R

A/R

A/R stands for accounts receivable. It refers to the money that a company is owed by its customers for goods or services that have been provided but not yet paid for.

Example 1: A small business sells $1,000 worth of products to a customer on credit. The customer agrees to pay the business within 30 days. The $1,000 is considered accounts receivable until the customer pays the bill.

Example 2: A medical clinic bills a patient's insurance company for a visit. The insurance company agrees to pay the clinic for the visit, but it may take several weeks for the payment to be processed. The amount owed by the insurance company is considered accounts receivable until the payment is received.

These examples illustrate how accounts receivable represents money that a company is owed but has not yet received. It is an important part of a company's financial records and can impact cash flow and profitability.