Accounts Receivable (A/R)
Accounts Receivable (AR) is the total amount of money that a company expects to receive from its customers for products or services that have already been delivered or rendered. In freight broking, AR usually refers to the money owed to the freight broker by its customers for shipments that have been made.
The AR figure will fluctuate over time as payments are received and/or invoices are sent out, but it’s important for freight brokers to keep track of how much money they’re owed so that they can ensure they’re always bringing in enough revenue to cover their costs. Additionally, if a freight broker has a large AR balance, it may be wise to offer discounts on future shipments in order to encourage customers to pay up sooner
AR usually includes an allowance for bad debts.
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