What is the accounting term for money owed to a company by its customers on credit?

The accounting term for money owed to a company by its customers on credit is accounts receivable.

Accounts receivable arise when a business delivers goods or services before receiving payment. The company records revenue and an asset representing the customer’s obligation, usually through an invoice with payment terms such as “Net 30.” Until the customer pays, the balance remains outstanding.

On a balance sheet, accounts receivable are normally listed as current assets because businesses generally expect collection within one year. When payment arrives, cash increases and accounts receivable decreases. The account is distinct from accounts payable, which records money the company owes to suppliers and other creditors.

Not every invoice will necessarily be collected. Businesses therefore estimate uncollectible amounts using an allowance for doubtful accounts, reducing the receivable’s net realizable value. Receivables can also be factored or pledged as collateral, linking this everyday bookkeeping item to short-term financing and working-capital management.