Your business’s Accounts Receivable are an important part of calculating your profitability, and provide the clearest indicator of the business’s income. They are considered an asset, as they represent money coming into the company.

Account Receivables are outstanding invoices for the business for the duration of the credit period. The amount owed by the customer is termed as accounts payable.

Terms of Payment for Accounts Receivable

Generally, the businesses or organizations mention their payment terms on their invoices or billing. These are the conditions a business expects their customers to fulfil to complete a sale. These terms or conditions on payment details like:

• Period for the payment
• Conditions for the payment
• Discounts to customers

Accounts receivables age analysis or accounts receivables aging report helps the owners in getting a firm grasp on their receivables and avoid bad debts. It gives them a list of unpaid invoices divided using date ranges into current, 30 days, 60 days, 90 days, or longer. Aged trial balance, thus prepared, is the primary tool for collections personnel to zero-in on overdue invoices.

Streamlining Accounts Receivables

Businesses need to be careful with four ingredients of the accounts receivable process:

• Account Setup
• Creation of transaction
• Processing of cash
• Management of credit

It is why businesses need to continuously monitor the cash flow statements to ensure a steady inflow or finances.

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