AccountsReceivableNetCurrentAccountsReceivableGrossCurrentAccounts receivable, net is the amount customers owe a company for goods and services it has already delivered on credit, after subtracting the allowance for credit losses the company expects never to collect. It is reported as a current asset when collection is expected within one year or the operating cycle, whichever is longer.
The net figure is gross receivables minus the allowance. It excludes formal notes and loans the company holds, amounts owed by non-customers, and receivables that fall due after more than a year, which are reported separately.
In XBRL filings, the balance-sheet line is tagged AccountsReceivableNetCurrent, which the SEC taxonomy describes as the company's right to be paid by customers for products and services sold in the ordinary course of business, after the credit-loss allowance. The amount before that deduction is tagged AccountsReceivableGrossCurrent and is usually found in a footnote or in parentheses on the face of the balance sheet.
Regulation S-X Rule 5-02.3 requires commercial and industrial companies to separate trade receivables from amounts owed by related parties, by underwriters, promoters, and employees outside the normal course of business, and by others. Rule 5-02.4 requires the allowance to be shown separately. Since the adoption of ASC 326, that allowance is based on credit losses the company expects over the receivable's life, rather than only losses that have already become probable.
Under ASC 606, a receivable is recorded only once the company's right to payment is unconditional, meaning only the passage of time stands between it and the cash. Amounts earned but still dependent on further performance are contract assets, not receivables. Companies that sell receivables to a factor or through a securitization may remove them from the balance sheet, which can make collection look faster than it is. Analysts track net receivables against revenue using days sales outstanding and receivables turnover. Receivables that grow faster than sales can signal looser credit terms, weaker customers, or revenue booked ahead of cash.
A: Gross accounts receivable is the full amount billed to customers. Net accounts receivable subtracts the allowance for credit losses, leaving the amount the company actually expects to collect.
A: Accounts receivable, net covers ordinary customer invoices only. Accounts and notes receivable is a broader line that adds formal written promissory notes, which often carry interest and a fixed maturity.
A: Often, but not always. Receivables rise with sales, but they also rise when customers pay more slowly. Comparing the growth of receivables with the growth of revenue shows which is happening.
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