Business Receivables and Payables in Zakat

Short answer: Customer dues that are collectible (from a solvent, acknowledging debtor) are considered 'strong debt' and must be added to your cash and inventory each year when calculating zakat. Doubtful or defaulted receivables are 'weak debts' and are only counted upon actual recovery. Supplier bills and other business payables are deducted from your total zakatable assets (cash + inventory + strong receivables) before zakat is calculated. This is the weightier view. Details: Zakat on business wealth is assessed on your net assets—what you own minus what you owe. For receivables: if the customer is able to pay and acknowledges the debt, it is treated as part of your wealth and you include it annually. If the debt is bad (defaulted or uncertain), you wait until you actually receive the money, then pay zakat for that year and past years if the amount exceeds nisab. For payables: all legitimate business debts (e.g., supplier bills, loans) are subtracted from your total assets (cash, inventory valued at current selling price, and strong receivables) before applying the zakat rate (2.5% on trade goods and cash). Evidence: 1. Fatawa of Shaykh al-Uthaymin and the Permanent Committee: business receivables from a solvent, acknowledging customer are a 'strong debt'—added yearly to inventory and cash for zakat. Defaulted/doubtful receivables are 'weak debts'—reckoned upon recovery. On business payables (supplier bills), the weightier view is that they are deducted from zakatable assets. (P1) 2. Surah Al-Baqarah 2:267 commands spending from good earnings, implying all wealth (including collectible receivables) is subject to zakat. (P2) 3. Fatawa of Shaykh al-Uthaymin on trade goods valuation: inventory is valued at fair selling price on zakat day, and this principle applies when adding inventory to the zakat base. (P4) Please consult a knowledgeable scholar or reliable Islamic finance expert if your business situation is complex (e.g., multiple debts, mixed receivables categories).