Money owed to a business for property or services that were provided on credit. The settlement of an account receivable begins by sending an invoice to the customer.
See Account.
Accounts receivable
Spiffy Cleaners is a dry-cleaning business that wants to buy new equipment. Unable to get a loan on favorable terms, Spiffy Cleaners decides to sell its accounts receivable to a factor.
On their face, the accounts receivable should generate $20,000 in the next four months. However, the factor buys them for $15,000 after heavily negotiating with Spiffy Cleaners about the risk of non-payment from certain customers.
Now, Spiffy Cleaners can use cash to buy equipment, and any payments from customers whose accounts were sold will be forwarded to the factor.
"The technical definition for 'account receivable,' as 'an amount due a business on account from a customer who has bought merchandise or received services,' is the appropriate definition to read into RCW 4.16.040(2) [a Washington state statute governing actions on accounts receivable]."
"Tingey seeks to collect a balance owed to his legal business by a client for legal services performed on behalf of that client. . . . The six-year limitation of RCW 4.16.040(2) for '[a]n action upon an account receivable incurred in the ordinary course of business' provides the statute of limitations in this action."