RECEIVABLES
An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customer. Receivables are recorded by a company’s accountants and reported on the balance sheet, and they include all debts owed to the company even if the debts are not currently due.
The company records receivables as and for the outstanding amounts soon. Long-term receivables which do not come due for a significant length of time , are recorded as long-term assets on the balances sheet; most short-term receivables are considered part of a company’s current assets.
ACCOUNTS RECEIVABLES
Money that customers (individuals or corporations) owe a company’s in exchange for its goods or services. Accounts receivables usually come in the form of operating lines of credit, and are usually due within a relative short time period, ranging from few days or weeks up to one year.
If the companys has receivables, means it has made the sale but has yet to collect the money from the purchaser. Most companies operate by allowing some portion of their sales to be on credit. These salesare usually to frequent customers, who are invoiced periodically, allowing them to avoid the hassle of physically making payments as each transaction occurs.
If you look at the balance sheet of a public company you will usually see accounts recorded as an asset, since it represents a legal obligation for the customer to remit cash for its debts. Conversely , when a company owes debts to its suppliers or other parties, these are known as accounts payable.
NET RECEIVABLES
A company’s accounts receivables(money owed to the company )minus bad debts.
If a company estimates that 2% of its sales are never going to be paid, then net receivables equals 98% (100%-2%) of accounts receivable.
ACCOUNT RECEIVABLE MANAGEMENT
Credit sales results in accounts receivable(AR). Selling goods on credit results into increase in sales and ultimately the profits also. At the same time the funds are blocked in accounts receivables. Therefore more funds are required to be raised to meet the working capital requirements. Moreover, it involves the risk of bad debts. Hence, selling goods on credit is beneficial (return) as well as dangerous(risk). The finance manager has to frame proper policies and take decisions regarding the sanction of credit
to customer.
Therefore ,Accounts Receivable Management is the process of decision-making relating to the investment of funds in these assets in such a manner that the shareholder’s investments is maximized.
AREAS COVERED BY RECEIVABLES MANAGEMENT
The receivables management may be concerned with the following aspects :-
a) Credit Analysis
b) Credit Terms
c) Credit Collection
d) Financing the receivables
e) Monitoring of receivables
An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customer. Receivables are recorded by a company’s accountants and reported on the balance sheet, and they include all debts owed to the company even if the debts are not currently due.
The company records receivables as and for the outstanding amounts soon. Long-term receivables which do not come due for a significant length of time , are recorded as long-term assets on the balances sheet; most short-term receivables are considered part of a company’s current assets.
ACCOUNTS RECEIVABLES
Money that customers (individuals or corporations) owe a company’s in exchange for its goods or services. Accounts receivables usually come in the form of operating lines of credit, and are usually due within a relative short time period, ranging from few days or weeks up to one year.
If the companys has receivables, means it has made the sale but has yet to collect the money from the purchaser. Most companies operate by allowing some portion of their sales to be on credit. These salesare usually to frequent customers, who are invoiced periodically, allowing them to avoid the hassle of physically making payments as each transaction occurs.
If you look at the balance sheet of a public company you will usually see accounts recorded as an asset, since it represents a legal obligation for the customer to remit cash for its debts. Conversely , when a company owes debts to its suppliers or other parties, these are known as accounts payable.
NET RECEIVABLES
A company’s accounts receivables(money owed to the company )minus bad debts.
If a company estimates that 2% of its sales are never going to be paid, then net receivables equals 98% (100%-2%) of accounts receivable.
ACCOUNT RECEIVABLE MANAGEMENT
Credit sales results in accounts receivable(AR). Selling goods on credit results into increase in sales and ultimately the profits also. At the same time the funds are blocked in accounts receivables. Therefore more funds are required to be raised to meet the working capital requirements. Moreover, it involves the risk of bad debts. Hence, selling goods on credit is beneficial (return) as well as dangerous(risk). The finance manager has to frame proper policies and take decisions regarding the sanction of credit
to customer.
Therefore ,Accounts Receivable Management is the process of decision-making relating to the investment of funds in these assets in such a manner that the shareholder’s investments is maximized.
AREAS COVERED BY RECEIVABLES MANAGEMENT
The receivables management may be concerned with the following aspects :-
a) Credit Analysis
b) Credit Terms
c) Credit Collection
d) Financing the receivables
e) Monitoring of receivables