What is Accounts Receivable?
Accounts receivable (AR) are amounts owed by customers to a business for goods or services delivered on credit but not yet collected, reported as current assets and aged into buckets (current, 30, 60, 90, 120+ days) for collection management and provisioning.
How It Works
- Recognition: debit accounts receivable, credit revenue at the point of sale.
- Aging: track invoices by days outstanding to prioritize collections.
- Allowance: provision for expected credit losses under IFRS 9.
- Write-off: charge uncollectible balances against the allowance.
Saudi Context
Saudi B2B sellers typically grant 30 to 90 day credit terms in trading and contracting, while government contracts (Ministries, Aramco, SABIC) can run to 90 to 180 days. Saudi sellers must record VAT on accounts receivable at invoice date, not collection date, and remit 15% output VAT to ZATCA on the next return regardless of whether the customer has paid.
Example
A Saudi distributor invoices a customer SAR 230,000 (SAR 200,000 goods + SAR 30,000 output VAT). Journal: Dr Accounts Receivable 230,000, Cr Revenue 200,000, Cr Output VAT 30,000. VAT remitted to ZATCA on the next monthly return.