Accounts receivable (AR) is the money a business is owed by its customers for goods or services it has already delivered but has not yet been paid for. When you invoice a buyer on credit terms instead of collecting payment upfront, that unpaid balance sits as a receivable until the customer settles it. AR is recorded as a current asset on the balance sheet because you expect the cash to arrive, usually within a set number of days.
How it works
When you deliver an order and issue an invoice with terms (for example, Net 30), you create a receivable. The buyer owes that amount and has until the due date to pay. Once payment lands, the receivable clears and the amount moves to cash. Until then, it is tracked in an AR aging report that groups outstanding invoices by how overdue they are (current, 1 to 30 days, 31 to 60 days, and so on).
Why it matters
Receivables are revenue you have earned but cannot spend yet. A large or slow AR balance ties up working capital and raises the risk of bad debt if customers pay late or not at all. Watching metrics like days sales outstanding (DSO) helps you understand how quickly you turn credit sales into cash.
In B2B quoting on Shopify
Wholesale and B2B buyers often expect terms rather than paying at checkout, so receivables are common once a quote converts to an order. Because Shopify checkout is built around immediate payment, many merchants use quoting tools alongside accounting software (or Shopify’s B2B payment terms) to track what is owed after an accepted quote becomes an order. See the B2B quoting glossary for related terms like net terms and draft orders.