What Are Other Receivables? Definition and Examples

Businesses often have money owed to them, which accountants categorize as “receivables.” These represent claims a company holds against others for money, goods, or services. While many receivables stem from typical sales activities, a significant portion arises from transactions outside the primary business operations.

Defining Other Receivables

“Other receivables” are financial assets representing amounts owed to a company from sources that do not originate from its core business activities, such as the sale of goods or services. These are distinct from “accounts receivable,” which arise when a business provides goods or services on credit to its customers. Accounts receivable are often referred to as “trade receivables” because they relate to a company’s primary trading activities.

The key difference lies in the nature of the transaction that creates the debt. For instance, if a retail store sells merchandise on credit, the money owed by the customer is an account receivable. However, if that same retail store lends money to an employee, the amount due back from the employee would be classified as an “other receivable” because lending money is not the store’s primary business. These non-trade receivables are crucial for a complete financial picture.

Common Categories and Examples

Various types of claims fall under the umbrella of “other receivables,” each representing money owed to a company from non-operating activities.

Notes Receivable: Money owed from formal loan agreements, often evidenced by a promissory note. Unlike trade credit, these usually involve a written promise to pay a specified amount by a certain date, often with interest.
Employee Advances: Loans or salary advances made by a company to its employees, expected to be repaid or offset against future payroll.
Interest Receivable: Interest that has been earned on investments or loans but has not yet been received. This can include interest from bonds, bank deposits, or loans to third parties.
Rent Receivable: Occurs when a company leases out property but has not yet collected the rent, provided that renting property is not its primary business.
Dividends Receivable: Refers to dividends declared by another company but not yet received from investments held.
Tax Refunds Receivable: Represents overpayments of taxes that are due back from government authorities to the company.

Reporting and Importance in Financial Statements

On a company’s balance sheet, “other receivables” are presented as assets, providing a snapshot of amounts owed to the company. Their classification as either current or non-current assets depends on the expected collection period. If the amount is anticipated to be collected within one year from the balance sheet date or within the company’s normal operating cycle, it is classified as a current asset. Conversely, if the collection is expected to take longer than one year, it is categorized as a non-current asset.

These receivables are usually grouped together under a single line item, often labeled “Other Receivables” or “Miscellaneous Receivables,” distinct from “Accounts Receivable.” This separate identification is important for financial analysis, as it offers insights into a company’s financial dealings that are outside its primary business operations. By distinguishing these non-operating claims, stakeholders can assess the company’s liquidity and overall financial health.