Category Archives: 1.17 Account Receivables

Recognizing collection of receivables

It’s one thing to recognize a sales receivable (note that it’s yet to be received) and another to account for the actual collection (received this “something to be received”. That’s what makes me most happy – its real money received and an asset the company can use for either buying new goods, make investments or pay salaries. In my personal opinion collecting receivables should be number one priority in every company.  Continue reading

Recognizing sales revenue over a longer period of time

There are occasions when sales are in essence services provided over a longer period of time. This “time” can be defined either by subprojects within the service itself or straight-line period, e.g. from 1 January until 31 December. When the service is in fact comprising of subservices, you ought to apply something called a “percentage of completion” method, however when it’s the latter, the method for recognizing revenue is clearer and requires less complicated estimates.  Continue reading

Factoring receivables

When we talk about factoring, we’re talking about selling ones receivables or collection of receivables to a third party commercial financial company. The aim of such a transaction is to receive cash quicker than one normally would if it would wait for the collection due dates or even late payments. You’ll be getting your money within agreed deadlines and provided the financial company is reliable you can concentrate your focus on your business now.

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