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Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit The accounts receivable team is in charge of receiving funds on behalf of a company and applying it towards their current pending balances. Collections and cashiering teams are part of the accounts receivable department. While the collections department seeks the debtor, the cashiering team applies the monies received. - Payment terms: The debtor is free to pay before the due date; businesses can offer a discount for early payment Accounts Receivable Age Analysis: An Accounts Receivable Age Analysis, also known as the Debtors Book is divided in categories for current,30 days,60 days,90 days or longer. The analysis or report is commonly known as an Aged Trial Balance. Customers are typically listed in alphabetic order or by the amount outstanding, or according to the company chart of accounts. Zero balances are not usually shown.
Account receivable is the amount due on a client, a customer or a subscriber against the service and goods received by them in accordance with the agreement with their vendor or supplier.
Payment term is the period in which the invoice has to be settled as agreed by both parties i. e supplier and receiver. It could be , or any number of days form the invoice generated or service/good received date.
In Accounting, Accounts Recieveable is a term which describes, A business Firm or any Company whose business is on the basis of CASH AND CREDIT. And to deliver/sell the goods, products on CREDIT, the Account Departments, Cashier issue a computrised INVOICE/NOTE, whihc the buyer,customer need to pay back on a agreed period of time. In other words, The amount paid after the purchased of the goods but as a Credit.
And second one The Payment Terms are, the sold goods to a particular party on a condition which the party has to clear his dues on certain time which the Company accepted to sell their goods.
A/R is the money expected to be received from clients
credit terms is the conditions agreed with the clients to pay back
noting that high AR ratio will tell us that we have to re look for our credit terms
Accounts receivable : The money your customers owe's you on the purchase of goods/services under the mutually agreed credit terms of payment , which depend on which type of industry you are trading in or what credit terms your competitors are offering.
Terms of payment : Mutually agreed payment terms or the credit days/months offered by you to your customer on the basis of industry norms .
Accounts Receivables mean total outstanding as of specific date but payment term refer that how much of total outstanding is due according to payment term. i.e or days from the date of invoice
Generally speaking, net terms are usually30 days unless otherwise there are stipulations within the contract between the creditor and debtor based on business cycle or services rendered. A lot of companies that go out of business within the first year fail to realize that A/R is the backbone of the company in both aspects, lending and collecting. Lending gives leverage to the fact that the company is in a position where it is able to lend and collecting which adds to the company’s equity thus allowing it to invest.
For the above to come into formation, the payment terms play an integral part. Money received can be used to pay company’s liabilities (money borrowed, salaries to employees, utilities, production of services and goods, and other expenses to run the business…), money can and should also be used to invest for future growth. Based upon the terms, a company is able to forecast its cash in-flow and out-flow. In case of negligent debtors, a company has to rethink its strategies. As I’ve mentioned before, a company should always have a written contract with its customers and within the contract company should offer a discount for an early payment and outline a penalty for late payments.
Accounts receivables means revenues - collections
in other words, if you invoice your customer with $K and you collect only $4k means your accounts receivables = $6k
it is either due or not due, it doe not matter. but you have invoiced you customer with $k and he owe you $6k
payments terms it is also called credit terms, which means the period or no of days you agreed with the customer to get paid. Usually it is days after receiving the invoice or the date of the invoice. For example, if the date of the invoice is Janst, means you are expecting to receive your money on Mar2nd, any day after that date it means you have an over due amount.
To understand Accounts Receivable (AR), we just have to know that in an organisation, from an accounting point of view, we have Customer Accounts which are allotted to the customers for goods or services provided by us to them on credit basis. This means we are their suppliers. Thus Accounts Receivable is the total amount receivable by an organization from all the Customer Accounts at any point of time.
Payment terms in general refer to the number of days allotted to a customer to settle the invoices debited to the customer's account. e.g. if a customer's payment term is30 days it means that the invoices debited under the customer's account become due for payment in30 days from the date of the invoice after which the invoices become overdue.
Accounts receivable is the money that is owed to a company by its customers. Accounts receivable is included in the "asset" column on a balance sheet.
AR-Accounts Receivable states that the Total Credit given to Customers based on days or as per entity rules and regulations in this regard. in the best possible way AR period is to days which means with in1 st and2nd stages/Buckets(0- days and- Days).
Payment terms represents: Within the agreed time by way of Cheque/Cash/Bank Transfer.
AR is considered and Current Assets which will reflect in Cash Flow statement as Source/Application.
