If accounts receivable increase sharply but seem not to be matched by the growth in sales, then it could inflate revenue figures for the firm. Accounts receivable is the amount of money customers owe to the firm. If accounts receivable are increasing at a higher rate than sales growth, that would mean the firm will be collecting revenue from sales for which the firm has yet to receive collection.
This could also mean that it is expensive to collect the cash from the customers, and, therefore, there would likely be future write-offs or bad debt expenses. Thus, investors need to dig deeper into the cash flows of the company and collection periods to determine if the increase in receivables is just a fleeting measure to hide other forms of financial issues.