Accounts receivable

Accounts receivable

Accounts receivable are the charge a company gives its clients. The terms and volume of these loan vary among companies and among countries; for manufacturing companies in the USA, as an instance, the proportion of receivables to revenue ranges between 8 and 12 percent, representing an average set period of roughly 1 month. The cornerstone of a company's credit policy is that the clinic in its own sector; normally, a company must satisfy the conditions provided by opponents. Much depends, naturally, about the individual client's credit status. Info on these items is accessed from the company's past experience with the client, supplemented by data from various credit institutions and credit-reporting agencies. (See credit agency.) In reviewing a charge program, the fiscal manager should respect losses from bad debts as part of the price of conducting business. Accounts receivable represent an investment in the growth of earnings. The yield on this investment could be computed as in almost any capital budgeting issue.