Accounts Receivable
Accounts receivable are amounts due from customers who have purchased
goods or services “on account.” Such
accounts are typically due within thirty days or on a certain date each month.
“Accounts Receivable” is a current asset account that is listed on the balance sheet. “Accounts receivable” is the proper plural form of the singular, “account receivable.”
The quality of accounts receivable is an important aspect of financial statement analysis. Analysts explore whether payments are being received in a timely manner as well as from whom the receivables are due and whether the customers are creditworthy.
“Accounts Receivable” is a current asset account that is listed on the balance sheet. “Accounts receivable” is the proper plural form of the singular, “account receivable.”
The quality of accounts receivable is an important aspect of financial statement analysis. Analysts explore whether payments are being received in a timely manner as well as from whom the receivables are due and whether the customers are creditworthy.
Accounts that are due every thirty days are also known as Net30 accounts. It simply means that the wholesaler or vendor provides credit to its customer for 30 days period. Many times there is also a credit limit as wholesalers want to keep the risk factor as little as possible. If the account reaches the credit limit before 30 days, the customer has to make a payment to make new purchases. If the customer makes these payments in a timely fashion, does not have over due invoices and does not have a so-called "problem account" then, the creditworthiness of the account is re-evaluated and the credit limit is increased over a period of time. But if the account remains unpaid or is late on payments, the business will suffer. Therefore, it is very important to be able to schedule payments in a timely fashion.
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