Money owed to a business by customers for products or services delivered but not yet paid for. Recorded as a current asset on the balance sheet.
Understanding Accounts Receivable (A/R)
Accounts receivable (A/R) is the money customers owe your business for products or services that have been delivered but not yet paid for. It is classified as a current asset on the balance sheet because it represents cash you expect to collect in the near future.
In ecommerce, A/R often manifests as pending marketplace payouts — Amazon, Shopify, and other platforms hold your sales proceeds for a settlement period before depositing them. Although the customer has already paid the marketplace, you haven't received the funds yet, making it a receivable from your perspective.
Managing A/R is crucial for cash flow planning. The longer it takes to collect receivables, the more working capital you need to cover operating expenses like inventory purchases and advertising.
Why It Matters for Ecommerce
For multi-channel ecommerce sellers, accounts receivable can represent tens of thousands of dollars tied up in marketplace settlement cycles at any given time. Understanding your A/R balance helps you plan inventory replenishment, negotiate supplier payment terms, and avoid cash crunches during high-sales periods like Q4.
Practical Example
After Black Friday, you have $15,000 in sales across Amazon and eBay that haven't been deposited yet. Your books should show $15,000 in accounts receivable (minus estimated fees). When the payouts arrive over the next 7-14 days, each deposit reduces A/R and increases your cash balance.
Related Terms
Accounts Payable (A/P)
Money a business owes to suppliers, vendors, or creditors for goods or services received but not yet paid for. Recorded as a current liability on the balance sheet.
AccountingBalance Sheet
A financial statement that reports a company's assets, liabilities, and equity at a specific point in time. The fundamental equation is Assets = Liabilities + Equity.
AccountingAccrual Accounting
An accounting method that records revenue when earned and expenses when incurred, regardless of when cash actually changes hands. Required by GAAP for most businesses above a certain size threshold.
Related Tools
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