Accounts receivable refers to the money owed to a business by its customers for goods or services that have been delivered but not yet paid for. This amount is recorded as an asset on the company's balance sheet, as it represents future cash inflows. Businesses typically extend credit to customers, allowing them to pay later. Managing accounts receivable effectively is crucial for maintaining cash flow, as delays in payment can impact a company's ability to meet its own financial obligations. Regular monitoring helps ensure timely collections and reduces the risk of bad debts.