Accounts receivable are revenue owed to a company from outside businesses.This is usually due to credit sales to customers.The ability to collect these receivables is very important to a company's cash flow.The ability to collect on receivables is determined by the credit worthiness of the businesses that have been extended credit as well as the aggressiveness of the collections process (Young, 2018).

There are two common ratios used to track receivables, they are the Accounts Receivable Turnover ratio and the Average Collection Period ratio.