Accounts receivable

What are accounts receivable?

In accounting, accounts receivable are collection rights that an entity owns over third parties until a specified date.

They can also be defined as the provision of certain goods made by an individual with the aim of acquiring them again within a period of time. This benefit of some good is paid to him with money in partial sums and, in the event that the payment is not fulfilled, the individual has the right to recover on credit what he sold.

Characteristics of accounts receivable

The main characteristics of accounts receivable are the following:

• The Rights they are charged during the agreed term, be it a short or long term.
• Before making the loan, the credit and financial history the client's.
• They are also requested references to do the accounts.
• Certain payment terms of interest and benefits for punctual payment.
• You can use several payment methods during the process.

Types of accounts receivable

There are 2 types of accounts receivable:

• Short term: case in which the availability of the money is immediate and the period of time does not exceed one year.
• Long-term: case in which the availability of the money has a temporary term of more than 1 year.

Importance of accounts receivable

Accounts receivable are of utmost relevance for a company since They represent the rights that it has over customers and from which it also obtains benefits, either through the sale of merchandise or services. that the company offers.

Through this system, the entity that registers the accounts receivable will obtain an inventory of said rights, and with this it will be able to benefit customers by offering them new payment methods such as credits or other forms that will also benefit the company.

Origin of accounts receivable

This method was introduced in accounting from the need to implement new ways to attract new customers and retain existing ones.

Although the conditions will vary according to the company, most entities tend to offer similar credits and terms. Using accounts receivable establishes a sure process of success and efficiency.