A measure of receivables (accounts receivable) of an entity that represents the amounts owed to it by its customers for economic resources (goods/ services) that have been sold and delivered on credit (on open account), minus that part of the money owed that will likely never be collected (i.e.., it will never be paid back by such customers)- as it falls into the category of bad debts (doubtful accounts).
Net receivables are often expressed as a percentage (collectible receivables to total receivables). The higher the percentage, the more likely that an entity will collect from its customers, and vice versa.
In calculation, net receivables can be reached at by subtracting allowance for doubtful accounts from accounts receivable (A/Rs) on the balance sheet (statement of financial position):
Net receivables = accounts receivable – allowance for doubtful debts
Where the two inputs shall reflect the state of affairs up to the point of calculation.
It is also referred to as net accounts receivable or net A/Rs.
