Accounts receivable (AR) is an asset that represents the amount of money that a company is owed by its customers for goods or services that have been sold but not yet paid for. Accounts receivable is typically recorded as a current asset on a company's balance sheet, and it is an important component of a company's working capital.

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Accounts receivable is generated when a company sells goods or services on credit, rather than receiving payment at the time of sale. The company then invoices the customer for the amount owed, and the invoice is recorded as an accounts receivable.

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Effective management of accounts receivable is critical for maintaining a company's financial health. By carefully managing its accounts receivable, a company can ensure that it has the funds it needs to operate and grow its business, while also avoiding losses from uncollectible accounts.

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To manage accounts receivable, companies typically have a set of policies and procedures for approving and extending credit to customers, as well as procedures for monitoring and collecting overdue accounts. Companies may also use various financial tools, such as factoring or accounts receivable financing, to improve their cash flow.

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Aaccounts receivable is an important component of a company's financial position, and effective management of accounts receivable is essential for maintaining cash flow and financial stability. By carefully monitoring their accounts receivable and implementing appropriate policies and procedures, companies can ensure that they have the funds they need to operate and grow their business, while also minimizing losses from uncollectible accounts.

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