Accounts receivable is the money owed to your business by customers for goods or services you have delivered but not yet been paid for.
Accounts receivable (AR) is a current asset. When you invoice a customer on credit terms, the amount owed becomes a receivable until they pay. Because AR represents cash you have earned but not collected, an ageing receivables list is one of the most important reports a business owner watches.
Under accrual accounting the sale is recognised as revenue when invoiced, and any GST/HST you charged becomes payable to the CRA on your return, even if the customer has not paid you yet. That timing mismatch, tax due before cash arrives, is exactly why collecting receivables promptly matters.
You invoice a client $5,000 plus $650 HST. Your AR is $5,650. On your next HST return you must remit the $650 to the CRA based on the invoice date, so slow-paying clients can leave you funding the tax out of pocket until they pay.
Our certified accounting firm handles this for businesses and individuals across Canada, at fixed fees with no surprises.
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