What do you understand by the processes involved in accounts receivable (trade debtors)?

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:

1. Credit Decisions: the supplier of goods and services checks if the prospective customer is of sufficient credit worthiness to warrant the supply of the products or services under an account arrangement.
2. Billing and Bill Distribution: happens once the good/services have been supplied.      Payments: are completed by the customer once they are ready to pay.
3. Receipting, Allocations and Reconciliation: This step is undertaken by an Accounts Receivables Officer. The AR Officer identifies a payment deposited into the supplier bank account,  receipts it into the AR system, allocates it to an invoice and reconciles to ensure that the payment is correct.
4. Collections: The Collections Officer identifies all invoices that are short paid or unpaid as of the due date.
5. Disputes Management: if the customer disputes a bill/invoice typically, this step is typically managed between a Collections Officer and the customer.
6. Bad Debt: once the bill/invoice reaches a set date and/or is under dispute and is not resolvable to the satisfaction of the supplier, it would then be considered a “bad debt”.

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:

• Proper credit checks to be undertaken before granting credit account.
• Hedge risk of default by securing Accounts Receivable with Letters of Credit or Bank Guarantees wherever applicable.
• Make sure that the invoices reach the right person at the right time.
• Proper and proactive follow-up of outstanding invoices.
• Invoice or service related disputes to be resolved within a set time frame so that it will not affect the ageing.
• Ensure debtors adhere to the credit terms and limits as mentioned on the mutually signed contract.
• Propose and implement stern action in the case of defaulters.

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-