Gross Accounts Receivable
Total Amount Owed by Customers Before Deductions
Gross Accounts Receivable is the total amount billed to customers for goods delivered or services rendered on credit, before subtracting any allowances for doubtful accounts, sales returns, or discounts. It represents the full invoice value of all open trade receivables at the balance sheet date, reflecting the company's total credit sales outstanding.
What Gross Accounts Receivable Means
Gross Accounts Receivable is simply the sum of all outstanding customer invoices. It's the starting point before any adjustments for expected non-payment or returns.
Think of it as what customers owe you on paper, in full, without considering how much you'll actually collect.
Net Accounts Receivable = Gross − Allowance for Doubtful Accounts − Other deductions.
A Simple Example
Your company sells $1 million of goods on credit during the quarter.
- Customers pay $700k immediately or within terms
- Leaving $300k still owed at quarter-end → Gross AR = $300k
- You estimate $15k won't be collected → Allowance = $15k
- Net AR reported = $285k
Gross tells the full sales-on-credit story; net shows what you realistically expect in cash.
How It Increases and Decreases
Increases From
- Credit sales
- New invoices issued
Decreases From
- Customer payments
- Write-offs of uncollectible amounts
- Sales returns/allowances
Balance Sheet Presentation
Under current assets as:
- 'Gross Accounts Receivable'
- Often shown with allowance below: 'Accounts Receivable, Gross $X Less: Allowance $(Y) Net $Z'
- Sometimes only net reported with gross in notes
Aging schedule (30/60/90+ days) usually in footnotes.
Why It Matters
- Direct link to sales volume (especially credit sales)
- Working capital tied up in receivables
- Collection efficiency (days sales outstanding = Gross AR / Avg daily sales)
- Credit policy aggressiveness
- Potential cash flow from existing sales
What to Watch For
- Faster growth than revenue → extending terms or slowing collections
- Aging trends (more over 90 days = risk)
- Allowance as % of gross (too low = aggressive, too high = conservative)
- Seasonality (retail spikes at year-end)
- Customer concentration risk
Rising gross AR without rising sales often signals collection problems.
Key Takeaways
Gross Accounts Receivable is total customer invoices outstanding.
Before any deductions for doubtful accounts or returns.
Direct reflection of credit sales volume.
Growth can come from more sales or slower payments.
Compare to net AR and revenue trends for collection health.
Critical for understanding working capital and cash conversion.
Gross Accounts Receivable
Total Amount Owed by Customers Before Deductions
Gross Accounts Receivable is the total amount billed to customers for goods delivered or services rendered on credit, before subtracting any allowances for doubtful accounts, sales returns, or discounts. It represents the full invoice value of all open trade receivables at the balance sheet date, reflecting the company's total credit sales outstanding.
Table of Contents
What Gross Accounts Receivable Means
Gross Accounts Receivable is simply the sum of all outstanding customer invoices. It's the starting point before any adjustments for expected non-payment or returns.
Think of it as what customers owe you on paper, in full, without considering how much you'll actually collect.
Net Accounts Receivable = Gross − Allowance for Doubtful Accounts − Other deductions.
A Simple Example
Your company sells $1 million of goods on credit during the quarter.
- Customers pay $700k immediately or within terms
- Leaving $300k still owed at quarter-end → Gross AR = $300k
- You estimate $15k won't be collected → Allowance = $15k
- Net AR reported = $285k
Gross tells the full sales-on-credit story; net shows what you realistically expect in cash.
How It Increases and Decreases
Increases From
- Credit sales
- New invoices issued
Decreases From
- Customer payments
- Write-offs of uncollectible amounts
- Sales returns/allowances
Balance Sheet Presentation
Under current assets as:
- 'Gross Accounts Receivable'
- Often shown with allowance below: 'Accounts Receivable, Gross $X Less: Allowance $(Y) Net $Z'
- Sometimes only net reported with gross in notes
Aging schedule (30/60/90+ days) usually in footnotes.
Why It Matters
- Direct link to sales volume (especially credit sales)
- Working capital tied up in receivables
- Collection efficiency (days sales outstanding = Gross AR / Avg daily sales)
- Credit policy aggressiveness
- Potential cash flow from existing sales
What to Watch For
- Faster growth than revenue → extending terms or slowing collections
- Aging trends (more over 90 days = risk)
- Allowance as % of gross (too low = aggressive, too high = conservative)
- Seasonality (retail spikes at year-end)
- Customer concentration risk
Rising gross AR without rising sales often signals collection problems.
Key Takeaways
Gross Accounts Receivable is total customer invoices outstanding.
Before any deductions for doubtful accounts or returns.
Direct reflection of credit sales volume.
Growth can come from more sales or slower payments.
Compare to net AR and revenue trends for collection health.
Critical for understanding working capital and cash conversion.
Related Terms
Apply This Knowledge
Ready to put Gross Accounts Receivable into practice? Use our tools to analyze your portfolio and explore market opportunities.
This content is also available on our main website for public access.