Calculating your Net Accounts Receivable is an important part of running a successful business. Simply put, it’s the difference between what you owe in debt (your total accounts receivable) and what you’re owed by customers (your total accounts payable).
In essence, it’s the amount of money that customers owe to your business but have yet to pay. Knowing your Net AR will give you an accurate snapshot of how healthy your business’s finances are – as well as where improvements may need to be made to boost cash flow. Keeping on top of this figure can help ensure your operations stay viable and profitable.