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Accounts Receivables is the amounts owing to a business from customers for invoiced amounts. They are classified as current assets on the balance sheet but distinguished from prepayments and other non trade debtors. A provision for doubtful debts is always shown against the accounts receivable in line with the concept of 'Prudence'. This provision is based on the company's past history of bad debt and its current expectations. A general provision is often based on percentage of the total credit sales. For example2% of credit sales made during the period.
Account Receivable is our assets.A/R is our customer that use our serives or receive our goods but the payments still not receive.
Accounts receivable is the money you're owed by customers. ... So the accounts receivable process includes things like sending invoices, watching to see if they've been paid, taking steps to chase payment, and matching payments to invoices (also known as invoice reconciliation).
The AR process is the process by which businesses receive payments from customers for goods or services sold.
The process has several steps:
While there are products assisting businesses to automate some of the AR steps in the process, IP Payments has developed a unique, award-winning solution that automates the entire AR process:
Accounts receivables are current assets to the company which will fulfill current obligations of the company within one year. Company can take short term loan against Account Receivables.
Accounts Receivable is a very important and sensitive current asset of an organization. Since it is very crucial, the following processes or steps are to be undertaken:
If these steps are followed, Accounts Receivable can be maintained as an invaluable asset of an organization.
Register Customer and approve Credit application form with Crdit Limit&Period
Collect the copy of documents as secuirity,which have legal acceptence.(Passport Copy of owner,Trade licence copy of company etc..)
Sale goods only against sales orders(LPO) and submit delivery note&Credit note and get authorised signature on it.
Follow up for collection on due time.
Fix the maximum possible credit sales according to our payment cycle and cash flow.
In every balance sheet debtors come in the assets side. The net debtors figure comes after a % deducted as bad debts. It is called reserve for bad debts. This percentage depends upon the companies past experience about debtors. If in any year the bad debt amount is remarkably less it would affect the profitability of the company positively.
Factors involving in Receivable management:
1. The terms of credit granted to customers deemed creditworthy.
2. The policies and practices of the firm in determining which customers are to be granted credit.
3. The paying practices of credit customers.
4. The vigoir of the sellers, collection policies and practice.
5. The volume of credit sales.
debtors balance exists(out) where the trder reperesents amounts facility owned by third parties this balance in creases and decreases throughout the year as a result of operations between debtors and the facility and analyze the balance of debtors can be classified into :
1- ordinary debt : the debetors accuont balance the general ledger
doubtful debts : the debt is lhkely uncollectible as a result of financial problems with detors
bad debts : the debt on others there is no hope in debts as a result of bankruptcy
the debtor and the lack of funds has asezure can-