Practical Law Glossary Item 2-382-3211 (Approx. 2 pages)
Glossary
Accounts Receivable
The right to receive payment in the future, created when a vendor allows a customer to purchase goods or services on open account. That is, the vendor, or trade creditor, delivers the goods or performs the services without receiving immediate payment, thereby extending trade credit to the customer. The customer is then expected to make payment in the ordinary course of business, usually within 7 to 90 days. The obligation to pay is an account receivable on the books of the trade creditor, and is an account payable on the books of the customer.