Notes receivable
In one sentenceWritten promises, such as bills of exchange and promissory notes, in which a customer undertakes to pay the business a set amount on a set date; they are presented within assets.
Simply put
The difference from accounts receivable is that the debt here is documented by a signed paper with a clear due date, so collecting it is easier and legally stronger.
When the customer signs the bill, the amount moves from their customer account to notes receivable, and on collection it goes into the bank.
Worked example
A building materials business is owed 30,000 SAR by a contractor on a credit invoice, so it asked him to sign a bill due after 90 days.
Dr: Notes receivable (debit)30,000
Cr: Accounts receivable: the contractor (credit)30,000
On collection: Dr Bank, Cr Notes receivable30,000
Notes receivable balance after collection0 SAR
Don't confuse it with
Accounts receivableReceivables are an ordinary debt backed by an invoice, while notes receivable are a debt documented by a written promise with a due date.