accounts receivable

Definition

Money owed to a company by customers who bought on credit—essentially IOUs that you hope will eventually become actual money. They're assets on paper until customers decide 'payment due in 30 days' is merely a suggestion.

Example Usage

The company's accounts receivable ballooned to $10 million, which would be great if any of those customers actually planned to pay.

Origin

Standard bookkeeping terminology dating to double-entry accounting systems of the Renaissance.

Fun Fact

There's an entire industry (factoring) built around buying accounts receivable at a discount for companies too impatient or desperate to wait for payment.

Source: Basic accounting terminology

Related Terms

Beginner

tax-free

The mythical unicorn of financial transactions: money that the government has graciously decided not to touch. Income or purchases that escape taxation, usually because lawmakers needed to incentivize something or felt charitable that particular legislative session. The two most beautiful words in accounting, often followed by fine print and eligibility requirements.

💰 Finance / Accounting

Advanced

gamma

The rate of change in an option's delta relative to the underlying asset's price movement. It's the derivative of a derivative, because one Greek letter measuring risk wasn't nearly confusing enough for options traders.

💰 Finance / Accounting

Beginner

loans

Money you borrow today that magically transforms into significantly more money you owe tomorrow, thanks to the mystical powers of interest rates. Think of it as financial time travel where your future self picks up the tab, plus fees. The cornerstone of modern capitalism and the reason your banker drives a nicer car than you do.

💰 Finance / Accounting

Beginner

taxes

Money extracted by the government in exchange for services you'll never see itemized on a receipt. Unlike paying for a latte, you don't get to choose the size, flavor, or whether you want it at all. The financial relationship status between you and your government: it's complicated, and it's definitely not negotiable.

💰 Finance / Accounting

Beginner

Index Fund

A fund that buys every stock in an index because picking individual winners is apparently too hard even for professionals. It's the financial equivalent of ordering one of everything on the menu because you can't decide, and somehow it works better than almost every other strategy.

💰 Finance / Accounting

Advanced

phantom revenue

Money a company claims to have earned but hasn't actually collected, often involving aggressive revenue recognition or outright fantasy. It exists on paper and nowhere else.

💰 Finance / Accounting

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