Trade Receivables represent the monetary amounts owed to a company by its customers for the purchase of goods or services delivered on a credit basis. These amounts are typically recorded as assets on the company's balance sheet, under current assets, signifying that they are expected to be collected within a short time frame, usually within a year. Effective management of trade receivables is crucial as it directly impacts the company's cash flow and working capital. For example, if a company sells office equipment to a corporate client on a credit term of 30 days, the amount due becomes part of trade receivables until the client makes the payment.

Companies often monitor the aging of receivables, categorizing them based on the length of time outstanding. This helps identify delayed payments and potential bad debts, ensuring timely follow-ups. Efficient trade receivables management can improve collection periods, reducing the time between providing goods or services and receiving payment. Businesses may also use trade receivables as collateral for financing, such as factoring or accounts receivable financing.

Examples of trade receivables include invoices sent to customers for products or services already delivered. If an organization fails to manage its trade receivables effectively, it could face liquidity challenges, emphasizing the importance of robust credit policies.