Legal Definitions - receivable

A "receivable" refers to an amount of money that is owed to an individual or an organization. It represents a claim for payment that is expected to be received in the future, typically for goods or services already provided, or for other financial obligations.

Here are some examples to illustrate this concept:

• Example 1: A Software Company's Invoice

  Imagine a software development company that completes a custom application for a client. Upon completion, the company sends an invoice to the client for the agreed-upon fee, with payment due in 30 days. Until the client pays, the amount on that invoice is a receivable for the software company.

  How it illustrates the term: The software company has provided the service and is now owed money. This expected payment is a receivable because the company has a right to receive that money from the client in the future.

• Example 2: A Freelance Photographer's Payment

  A freelance photographer is hired to cover a wedding. After delivering the edited photos to the couple, the photographer sends them a bill for their services. The money the couple owes the photographer for the wedding photography is a receivable for the photographer.

  How it illustrates the term: The photographer has performed the work and is now entitled to payment. This outstanding amount represents money that is due to the photographer and is expected to be received.

• Example 3: A Utility Company's Monthly Bills

  A local electricity provider sends out monthly bills to all its customers for the power they consumed. The total sum of all these unpaid bills, before customers have sent in their payments, constitutes a large collection of receivables for the electricity company.

  How it illustrates the term: The utility company has delivered its service (electricity) to its customers and is now owed payment for that service. Each customer's outstanding bill is an amount the company expects to receive.