Receivables usually arise from the unpaid sale of goods or services. As companies extend lines of credit to their clients, they allow a portion of their sales to be on credit. Individuals may also have receivables as well. For example if you are paid bi-monthly, the wages that that you have earned but have yet to be paid for are your receivables.

On a company's balance sheet receivables are most often recorded as assets, since accounts receivable reflects unsettled debt, essentially expected assets.

An important distinction should be made before liquid like cash, and illiquid assets like receivables. Creditors and potential lenders to the company will usually want to have disclosed what portion of a company's assets are liquid cash, (which may easy pay off debt quickly), and which portion of assets are receivables. Receivables may not be easily turned into cash.