Accounts Receivable (AR)
Accounts Receivable (AR) refers to the money owed to your business by customers who received goods or services but haven’t paid yet. In simple terms, ito yung “mga dapat mong singilin.”
AR is recorded as a current asset on your balance sheet because it represents money you expect to collect soon.
Why Accounts Receivable Matters
For Filipino MSMEs, AR is a lifeline — especially if your business allows “pay later,” “pautang,” or invoice-based payments. AR affects:
- Cash flow — delayed collections can choke your operations
- Business stability — too much unpaid AR can cause shortages
- Customer relationships — clear terms prevent misunderstandings
- Growth — predictable collections help you plan inventory and staffing
- Credit decisions — knowing who pays on time helps you avoid bad debt
Many Filipino businesses struggle not because of low sales, but because customers don’t pay on time. Managing AR well keeps your business healthy.
Example / Context
Example 1 (Sari‑sari Store):
A regular customer buys groceries worth ₱300 and says “pahiram muna, babayaran ko bukas.” Until they pay, that ₱300 is part of your Accounts Receivable.
Example 2 (Freelancer):
You finish a ₱12,000 logo design project and send an invoice due in 15 days. Until the client pays, the ₱12,000 is AR.
Example 3 (Small Distributor):
You deliver ₱50,000 worth of goods to a mini‑mart with 30‑day terms. That unpaid amount becomes AR until collected.
Related Terms
FAQs
1. Is Accounts Receivable the same as pautang?
Yes — but specifically business-related pautang where customers owe you money for goods or services already delivered.
2. What happens if customers don’t pay on time?
Your cash flow suffers. You may struggle to buy inventory, pay suppliers, or cover operating expenses.
3. How do small businesses track AR?
Most MSMEs use notebooks, Excel, Google Sheets, POS systems, or bookkeeping apps. Larger businesses use accounting software.
4. Is Accounts Receivable good or bad?
AR is good because it means you made a sale — but it becomes risky if customers take too long to pay.