Accounts Receivable

Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit.

To establish a credit policy, a company must establish credit standards, credit terms, and a collection policy.

Terms of trade credit include the amount of time allowable for payment to be received, including any potential discounts.

Companies use different methods to collect their outstanding receivables, like sending out reminders or employing a collection agency.