IKAP

Accounts Receivable

DEFINITION

Income you expect to receive from your customers.

IMPORTANCE

Knowing which customers owe you money and when payments are due prevents you from giving away free product and helps you anticipate projected cash flow. Accounts receivable are a key part of a company’s assets, and correctly tracking this impacts your company’s worth and profitability. It also serves as proof of income to the IRS.

EXAMPLE

  • Invoicing
  • Credit advances to clients