Plain definition
Accounts receivable are amounts customers owe for goods or services already supplied on credit. They are a claim on future cash, not cash in the bank; the recorded amount may need an allowance when evidence suggests collection is doubtful.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
A consultancy invoices on 30-day terms. Revenue and receivables increase on issue, but cash has not arrived. On day 25 the customer disputes . The collections lead changes the forecast: is still expected on day 30, while the disputed amount is assigned to a resolution date rather than treated as available cash.
Why it matters
That distinction prevents the owner from approving of spending against an invoice that may not be paid on time.
Practical consequence
Review material balances by due date, dispute, credit risk, and expected collection date. Match the ageing to the ledger and update the cash forecast whenever a promise, dispute, or payment plan changes.