Accounts Receivable
The total amount of money owed to a distributor or brand by retailers and channel partners for goods sold on credit, forming a critical component of working capital.
Full definition
Accounts receivable (AR) is the aggregate of all money owed to a distributor or brand by its downstream buyers — retailers, wholesalers, and sub-distributors — for goods already invoiced and delivered on credit. In the Indian FMCG distribution ecosystem, AR is the single largest current asset on a distributor's balance sheet, often representing 60-70% of total working capital deployed.
Managing AR well is a survival skill for Indian distributors. A typical dairy or FMCG distributor operating at Rs 50 lakh monthly turnover may carry Rs 15-25 lakh in receivables at any point. If this number creeps up because retailers delay payment beyond the agreed credit period, the distributor runs out of cash to place the next primary order with the brand — creating a vicious cycle of stockouts and lost sales.
Modern invoice and billing platforms track AR in real time, ageing every invoice automatically. Coupled with sales analytics, brands can monitor distributor-level AR health across the network and intervene before a credit crisis becomes a supply crisis.
Real-world example
A Vadilal ice cream distributor in Surat has Rs 18 lakh in accounts receivable — Rs 12 lakh within credit period and Rs 6 lakh overdue — requiring immediate collection follow-up on the overdue portion.
Where it applies
Applicable industries
This term is relevant across the following SpireStock-supported industries.
How SpireStock handles it
Related SpireStock features
The concepts described above are implemented end-to-end in these product modules.
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