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Financialaka: ARaka: receivables

Accounts Receivable

In Plain English

The money owed to a contractor by the owner for work that has been completed and billed but not yet collected.

Definition

Accounts receivable (AR) in construction represents the amounts owed to a contractor by the owner for completed work that has been billed but not yet paid. Managing AR closely is critical to cash flow, as slow-paying owners can create cash shortfalls even on profitable projects. AR aging analysis identifies overdue invoices for collection efforts.

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