Definition
Accounts receivable is money owed by customers for invoices issued but not yet paid. It affects cash flow and collections risk.
Example
If you invoice $100k this month but only collect $60k, AR increased by $40k, reducing cash even if revenue looked strong.
How to use it
- High AR can create cash strain even with healthy revenue growth.
- Improving collections (DSO) is one of the fastest levers to extend runway.
Measured as
Measure Accounts Receivable (AR) with the same date, unit basis, and accounting or policy definitions used in the rest of your model.
Operator takeaway
- High AR can create cash strain even with healthy revenue growth.
- Improving collections (DSO) is one of the fastest levers to extend runway.
- Tie Accounts Receivable (AR) to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Read Runway and burn: gross vs net burn, working capital, and cash levers if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
- Decide whether Accounts Receivable (AR) belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
Where to use this on MetricKit
Guides
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.
- Cash conversion cycle: turn working capital into runway: A practical guide to the cash conversion cycle (CCC): how AR/AP timing changes cash, how to reduce days outstanding, and why runway depends on working capital.
- Cash runway: how to estimate burn, break-even, and survival time: A practical guide to runway: net burn, gross profit, break-even revenue, and how to avoid common cash planning mistakes.