Receivables, sometimes referred to as accounts receivables, are sums that a business is owed by its clients or customers for products sold or services provided on credit, it stands for the company's brief other of credit to its clients.

The following information regarding receivables: 

Receivables

Receivables are defined as the right to be paid by customers for the sale of products or services. Receivables are listed as assets on a company's balance sheet. They result from regular business activities and are ussually anticipated to be paid within a year.

Types of Receivables

Receivables can be classified into the following categories :-

a. Trade Receivables : These are sums owned by clients for the sale of goods or services in the regular course of business. They are the most typical kinf of receivables and are typically accompanied by an invoice.

b. Non-Trade Recaivables : These are sums due by parties other than clients, including associates or workers, and are not specially connected to the company's main lines of activity.

Importance of Receivables Management

Maintaining cash flow and a company's financial stability depend on effective receivables management management. It entails assessing the creditworthiness of clients, setting credit limits, making prompt collection efforts, and keeping track of the receivables aging. Effective receivables management increase profitability, increase liquidity, and lowers bad debts.

Accounts Receivables Turnover Ratio

An accounting indicator  that shows how rapidly a business collects its receivables is the accounts receivables turnover ratio. It is determined by dividing net credit sales by the average amount of accounts receivable for a given time frame. A higher turnover ratio signifies quicker cash conversion and better receivables management.

Bad debts snd Allowance for Doubtful Accounts Customers that are unable unwilling to pay their outstanding accounts are considered to have bad debts. Companies establish an allowance for doubtful accounts, which is an estimate of the portion of receivables that is unlikely to be collected, to take this likelihood into consideration. To reflect a more accurate value of collected receivables, the allowance is deducted from the total accounts receivable

Factoring and Receivables Financing

Companies ocassionally decide to sell their receivables to independent financial institutions at a discount. This is known as factoring and receivables financing. The term "factoring' or "receivables financing" refers to the process. Even if they have to suffer a loss because of the discount, it enables them to transform their receivables into quick cash.

Financial Reporting of Recievables

Receivables are represented in the financial statement as current assets on a company's balance sheet. Normally, they are shown minus the provision for dubious accounts. The age of receivables, the terms of the credit agreement, and any concentration of credit risk are possible additional disclosures in the financial statements.

Generally Accepted Accounting Principles (GAAP) or nternationally Financial Reporting Standards (IFRs) are two examples of internationally recognized accounting standards that may be used to determine specific accounting procedures and terminology.