Receivable

A receivable is a type of asset that represents a right to receive money in the future. Receivables are created when a company sells goods or services on credit. The amount of money that a company is owed by its customers is called accounts receivable. Accounts receivable are considered to be a liquid asset because they can be converted into cash relatively easily.

There are two main types of receivables: trade receivables and non-trade receivables. Trade receivables are created when a company sells goods or services to another company on credit. Non-trade receivables are created when a company sells goods or services to a consumer on credit.

Accounts receivable are an important part of a company's financial statements. They are listed on the balance sheet as a current asset. The value of accounts receivable is determined by the amount of money that the company is owed by its customers.

Accounts receivable are an important source of financing for businesses. They can be used to fund operations, make investments, or pay dividends to shareholders. However, accounts receivable can also be a source of risk for businesses. If a customer does not pay their bill, the company may have to write off the receivable as a bad debt.

There are a number of ways to manage accounts receivable. One way is to use a credit scoring system to evaluate the creditworthiness of potential customers. Another way is to require customers to make a down payment or provide collateral before goods or services are shipped. Finally, companies can use collection agencies to collect overdue payments from customers.

Accounts receivable are an important part of every business. By managing accounts receivable effectively, companies can improve their cash flow and reduce the risk of bad debts.