This document discusses receivables management. It defines receivables as money owed to a firm for products or services sold on credit. Accounts receivable are recorded as current assets on a balance sheet. The objectives of receivables management are to monitor cash flow, minimize bad debts, avoid invoice disputes, boost sales, improve customer satisfaction, and help businesses compete. It also discusses different types of receivables like notes and non-trade receivables. The key aspect of receivables management is establishing policies to ensure timely collection of owed payments.

1. MANAGEMENT
OF RECEIVABLES
CHRISTIAN PROGIO

2. OUTLINE
01. Receivables De
f
ined
02 Accounts Receivable vs Accounts Payable
03 Types of Receivables
04 Objective of Receivable Management

3. I.WHAT ARE RECEIVABLES
Receivables, also regarded as accounts receivables
represents money owed by entities to the
f
irm on the
sale of products or services on credit.
In most business entities, accounts receivable is
typically executed by generating an invoice and either
mailing or electronically delivering it to the customer,
who, in turn, must pay it within an established time-
frame, called credit terms or payment terms.

4. RECEIVABLES ARE BOUNDED BY PAYMENT
TERMS AND CREDIT LIMIT
Credit Limit is total amount of accounts receivable
allowed to an individual customer set by the seller’s
credit department

5. JOURNAL
REPRESENTATION OF AR
Accounts receivable are found in the balance sheet under the ‘current assets’
as they add value to the
f
irm and represent money coming in (as a future cash
payment).
Account receivables are classi
f
ied as current assets assuming that they are due
within one year. To record a journal entry for a sale on account, one must debit
a receivable and credit a revenue account. When the customer pays o
ff
their
accounts, one debits cash and credits the receivable in the journal entry. The
ending balance on the trial balance sheet for accounts receivable is usually a
debit.

6. ACCOUNT
RECEIVABLES VS
ACCOUNT PAYABLE
Accounts payable are the opposite of
accounts receivable. Instead of
representing money a client owes to
you, Accounts payables represent
money you owe to another business.
Accounts receivable are asset accounts,
while accounts payable are liability
accounts.
AR
AP

7. Accounts receivable usually occur
because of credit sales. It arises as a
result of buying goods or services on
credit. In general, the payment period
ranges from one to two months.
ACCOUNT
RECEIVABLES
TYPES OF RECEIVABLES
This receivable has a physical form of a formal
letter. This type of loan has a bill of between 2-3
months. Debt settlement made within that time
will not be subject to interest. However, if the
debtor requests an extension of the payment
period, interest will be charged according to a
monthly extension.
NOTES RECEIVABLES
This receivable is of a broader type, as it
includes interest receivables, salary receivables,
employee advances, and tax refunds. Due to
their general nature, notes can be reported
separately on the balance sheet.
NON-TRADE
RECEIVABLES

8. ACCOUNT
RECEIVABLE
MANAGEMENT
Definition

9. ACCOUNT RECEIVABLE
MANAGEMENT (ARM)
Account Receivable Management (ARM) is a set of policies
and procedures to ensure that owed payments are collected
on time, in their entirety and credited to the proper account.
Good AR management directly contributes to a company’s
pro
f
it because it reduces bad debt.
Bad Debt refers to loans or outstanding balances owed that
are no longer deemed recoverable and must be written o
ff
.

10. ACCOUNT
RECEIVABLE
MANAGEMENT
Objectives

11. 1. Monitor And Improve Cash Flow
Receivable management monitors and control
all cash movements of organizations. It
maintains a systematic record of all sales
transactions. It aims that a sufficient amount of
cash needed for day-to-day activities is
maintained at business.

12. 2. Minimizes Bad Debt Losses
Bad debts are harmful to organization and may
lead to heavy losses. It designs and implement
schedules for collection of outstanding amount
timely and informs the collection department on
due dates. Customers are notified for amount
standing against them and charges interest on
delay in payments.

13. 3. Avoids Invoice Disputes
Receivable management has an efficient role in
avoiding any disputes arising in business.
Complete and fair record of all transactions
with customers are maintained on a daily basis.

14. 4. Boost Up Sales Volume
By extending the credit facilities to their
customers business are able to boost up their
sales volume. More and more customers are
able to do transactions with the business by
purchasing products on a credit basis.

15. 5. Improve Customer Satisfaction
Customer satisfaction and retention are key
goals of every business. By lending credit, it
supports financially weaken customers who
can’t purchase business products fully on a
cash basis.

16. 6. Helps In Facing Competition
Receivable management helps in facing stiff
competition in the market. Several competitors
existing in market offers different credit options
to attract more and more customers.
Appropriate amount and rates of credit
transactions can be easily decided through
receivable management process.

17. T H A N K S!
For listening 😀