If the customers take a longer time to pay, it can have a significant impact on your cash flow.Īccounts receivable are classified as an asset as they are outstanding payments and are recorded in the current asset section of the balance sheet. If a company has accounts receivable balance, this means that portion of the revenue is still outstanding. Late payments from customers can lead to cash flow problems for any business. Even if you have a lot of customers, but if they are not paying you on time or not paying you at all can hurt your business very badly. Having a healthy accounts receivable is always recommended. Understanding the importance of accounts receivable is very crucial for maintaining the good financial health of your business. Accounts receivable are recorded as an asset on your company’s balance sheet. Your accounts receivable consist of all the unpaid invoices or money owed by your customers. Accounts receivable is money that your customers owe you for buying goods and services on credit.
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