How to survive seasonal business downturns
Many business areas change supply and demand several times during the year. The seasonality of this phenomenon depends on many factors: customer habits, seasonality of the product itself, weather conditions…

Continue reading →

Business on his car
Opening your own business, you need to decide on the direction of the future business and carefully consider all possible options for its implementation. There are a lot of options…

Continue reading →

Business Plans for Beginners
Business plans for entrepreneurs are, of course, very important. Moreover, they are equally needed for businessmen who have already taken place, not because they are some kind of “ritual” or…

Continue reading →

Types of receivables

Accounts receivable (accounts receivable) is the amount of money that third parties must pay. It is a dynamic option for moving working capital. Accounts receivable from virtually any enterprise or commercial organization.

Types of receivables

In accounting, receivables are recorded in the total amount of cash in relation to legal entities and individuals. This debt depends on the financial policy applied by the company regarding its customers or other business partners.
Receipt of the receivables to the account of the enterprise is one of the main articles of profit of the enterprise. The less time intervals that should be fixed in the contract are agreed, the more efficient the increase in equity will occur.

The receivable, in its essence, is divided into 2 main types:

. normal

. unjustified.

Under normal debt, it means obtaining commercial loans. Moreover, in the conditions of the loan, the loan term and the date of making regular payments should be clearly defined.

Unjustified, may arise in the case when the debtors violate the estimated terms. This can negatively affect the entire financial condition of the organization. To exclude the occurrence of unjustified debt, the following actions should be taken by the organization’s managers:

. debt analysis;

. determination of the maturity established by the contract;

. analysis of the financial condition of the consumer of goods / services;

. development of a unified policy, according to which funds overdue for payment will be collected;

. formation of a reserve fund of the enterprise, which will help to avoid the occurrence of own debts on loans.

The receivable is also divided by its maturity. Distinguish short-term and long-term debt. In the short-term, repayment of debt should occur throughout the calendar year from the end of the repayment period. In case of long-term delinquencies, the repayment of funds occurs no earlier than a year after the established payment date.

Write-off of receivables

In order not to distort the financial statements and provide the company with a stable financial position, it is imperative to demand a return of the debt. First, such a claim must be in the form of a claim. If these actions do not lead to results, then with all outstanding requirements it is necessary to apply to the court.
The internal financial policy of any enterprise should include monitoring and analysis of debt of debtors. In the event that the amount of the debts of all partners is ascertained, a requirement to pay them must be set. The next step is to make sure that all settlements with the counterparty are reconciled. Then, when the statute of limitations for the return of the debt is missed or the debtor company has been liquidated, the amount of outstanding funds will have to be written off.

An organization may create a reserve fund for bad debts as long as time goes by to rehabilitate the borrower’s solvency. If debts are written off to the organization’s loss due to the debtor’s inability to repay them, the debt funds themselves cannot be canceled. The amount of these funds should “hang” on the balance sheet of the company for a period of 5 years. But it should be monitored for the possible likelihood of a return of lost funds, if suddenly the financial condition of the non-payer changes for the better.

It is mandatory to conduct an inventory of receivables. As a result of these actions, the identification of doubtful debts or that which is not possible to recover may occur. You should regularly monitor the statute of limitations, so as not to miss the time of their expiration.

Also, it should evaluate the effectiveness of their financial condition, which will help maintain the efficiency of the entire organization. Moreover, it is required to assess the degree of accounts receivable and the possible dynamics of its movement in previous periods.

Accounts receivable sooner or later arise from each entrepreneur or head of the organization. The more he gains experience in managing the organization’s risks and the faster he understands the market environment, the sooner he will learn to minimize the risks of non-payment. This will help the company to work more efficiently and be financially sustainable.

Your online business - what to do to earn money
Today, more and more people are attracted to the Internet to create their own business. It is convenient, provides a good influx of customers, practically does not require cash investments,…

...

How to build a business on caring for the elderly. History of Right at Home.
An elderly farmer whose daughter worked in the navy and could not provide her father with decent care, named Art. His requirements for a person helping with the housework were…

...

How to start a business without money
Many may not agree that you can start your own business without the means to do so. In fact, this is quite real. We can say that the average person…

...

Three tips to identify good business ideas and help your small business succeed.
One of the most valuable assets that any company can possess is an inexhaustible source with creative people who generate worthwhile ideas for developing services, products and even new businesses.…

...