RECEIVABLES Meaning and
Definition
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Receivables, in the context of accounting and finance, refer to the money owed to a company by its customers or clients for goods or services that have been delivered but not yet paid for. It represents the business's right to receive payment from these customers or clients in the future. Receivables are classified as assets on a company's balance sheet as they represent future incoming cash flows.
Receivables can take various forms, including accounts receivable, notes receivable, and other forms of trade credit. Accounts receivable are typically short-term, non-interest-bearing debts owed to the company by its customers. These arise when a company extends credit terms to customers or allows them to make purchases on credit. Notes receivable, on the other hand, are formal written promises by customers or clients to pay the owed amount on a specific date, often with an added interest rate.
Managing receivables is an important aspect of a company's financial management. This includes maintaining accurate records of the outstanding amounts, establishing credit policies, monitoring payment collections, and following up on late or non-payment cases. Companies may also implement strategies to mitigate the risk of bad debts or defaults by customers, such as credit checks, collateral requirements, or engaging debt collection agencies.
Overall, receivables represent the outstanding payments that a company expects to receive from its customers, and they play a crucial role in assessing a company's liquidity, cash flow, and overall financial health.
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Etymology of RECEIVABLES
The word "receivables" comes from the verb "receive", which dates back to the 14th century. Its origin can be traced to the Old French word "receivre" which came from the Latin word "recipere", meaning "to take back, regain, recover, receive". "Receivables" is the noun form of "receive", referring to the amounts owed to a business or individual for goods or services provided.
Similar spelling word for RECEIVABLES
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