Accounts receivable represent sales that have not yet been collected as cash. Receivables constitute the primary source for the funds that are needed to run most commercial enterprises today. You sell your merchandise or services in exchange for a customer's promise to pay you at a certain time in the future. If your business commonly extends credit to its customers, then the payment of accounts receivable is likely to be a large factor of your cash inflows. In the worst case scenario, unpaid accounts receivable will leave your business without the necessary cash to pay its own bills. More commonly, late-paying or slow-paying customers will create cash shortages, leaving your business without the cash necessary to cover its own cash outflow obligations.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment