What is the meaning of 'arrearages' in financial terms?

Arrearages in financial terms refer to obligations that have not been paid when they were due. This concept highlights amounts that are past due, indicating that a borrower or debtor has missed scheduled payments. Arrearages can occur in various contexts, such as loans, utility bills, and rent, where payments are expected on a regular basis. When payments are in arrears, it often means that the creditor may take further action, such as penalties or charges, or potentially legal steps to recover the owed amounts. Understanding arrearages is crucial in financial management as it impacts cash flow and overall financial health.