As it happens, not always your suppliers issue their invoices in time, sometimes invoices get lost in mail and so on. If you have more than just one person making expenses, i.e. buying materials etc., it may happen that the invoices just lay in the back of their drawers somewhere and are at some point […]
Normally, receivables on the statement of cash flows are treated as a part of cash flows from operating activities. I say “normally” since some receivables, those not related to the company’s business, should be part of investing activities.
Whenever your customers cannot pay in due time, you should ensure they’re aware of the consequences. Under normal conditions, if you buy from somewhere services or goods and don’t pay up, it’s considered taking a loan. I say “normal conditions” since it’s assumed you haven’t bargained for special treatment, i.e. longer payment terms for an […]
Say there’s a situation where you consider a receivable being doubtful, you write it down and after a while your customer still pays the balance. How would you treat such a transaction in your accounting?
Sometimes it happens so that you are unable to collect the receivable and as it happens, you should consider writing it down. Whenever your client has financial difficulties, it’s one of the conditions that should make you doubt the ability of the customer to actually pay up what they owe.
Making a sale happen is one thing. You’ve accounted for the receivable from the sale, that’s another thing. Getting paid for the sale and collecting the receivable is entirely another matter. In one of our examples we accounted the receivable and we’ve been lucky enough that our client actually owned to what they had to […]
There are situations where you might be in need of cash or to simply motivate your customers to pay up quicker to have some buffer when it comes to more liquid resources, you’d implement something called a cash discount. The way cash discount works is simple – there’s the expected payment deadline and in addition, […]