What are Credit sales?
Credit sales are sales made by a business to a customer which do not require immediate payment.
The customer has an account with the business, and will be required to pay in accordance with the credit terms agreed with the business, for example they may be required to pay in 30 days time. The balance outstanding on the customers account is an asset of the business called accounts receivable, and represents money owed by the customer.
Credit sales are sometimes referred to as on account sales.
For further information on credit sales see our sales tutorials.
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About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.