Arrears: A term used to describe overdue payments or debts that have not been paid by the due date. Arrears can refer to missed payments on loans, mortgages, rent, or utilities and are often subject to penalties, interest, or legal action.

Applications/Uses

1. Loan Repayments
   • If a borrower misses an installment payment, the missed amount is considered “in arrears.” For example, a mortgage payment due on the 1st of the month but unpaid by the 15th is in arrears.
   • Use Case: “The account has been in arrears for 60 days, accruing additional interest.”
2. Employee Salaries
   • Arrears can refer to payments made after the work has been completed, often seen in payroll processing.
   • Use Case: “Salaries will be paid in arrears, meaning employees will be compensated for the previous month’s work.”
3. Utility Bills
   • If utility bills (e.g., electricity, water) are unpaid past the due date, they enter arrears.
   • Use Case: “Your water bill is in arrears and may result in service disconnection.”
4. Lease Agreements
   • Rent arrears occur when tenants fail to pay rent on time, potentially leading to eviction proceedings.
   • Use Case: “The tenant was evicted due to 90 days of rent arrears.”

Abbreviation

There is no formal abbreviation for arrears, but it may be informally referred to as “Ars” in financial documentation.

Synonyms

• Overdue balance
• Past-due payment
• Outstanding debt
• Default
• Backlog

Examples

• “The company has been struggling with accounts in arrears, impacting their cash flow.”
• “To avoid penalties, clear your arrears by the end of the month.”
• “A letter was sent to all customers in arrears to encourage timely repayment.”