What does DAR stand for in the context of accounts receivable?

In the context of accounts receivable, DAR stands for Days Accounts Receivable. This metric is crucial for measuring the effectiveness of a company’s credit and collections efforts. It indicates the average number of days that receivables remain outstanding before they are collected.

A lower DAR number suggests that a company is efficient in collecting its accounts receivable, which improves cash flow. In contrast, a higher DAR indicates that the company may struggle with collections, potentially leading to cash flow issues. Businesses often use this metric to evaluate their credit policies, manage cash resource planning, and identify trends in customer payment behavior.

The other options do not accurately represent the common terminology used in accounts receivable management, making them less relevant in this context.