Technical definition
Amounts owed by customers for goods or services already delivered on credit.
How it works
Credit revenue creates a receivable. Collection increases cash and removes the receivable without creating new revenue. Receivables are reported net of expected credit losses where applicable.
Everyday example
A $2,000 credit sale records debit Receivables and credit Revenue; later collection records debit Cash and credit Receivables.
Common pitfall
Growth in receivables can signal growth, slower collection or weaker credit quality; context is essential.