Accounts receivable are the monies that customers owe your company for products or services that were invoiced. Accounts payable are the reverse.
When applying for a loan, lenders look at your financial statements to try to assess your repayment ability. But at times, they would also like to look at your AR/AP to determine if you can service your monthly instalments and not just about paying off the loan as a whole. We wrote a blog on common cashflow mistakes and potential issues when one does not prepare a monthly ARAP statement. If you are interested in reading it, please click here.