accounts receivable


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Related to accounts receivable: Accounts Receivable Management

accounts receivable

n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying its own debts. Evaluation of the chances of collecting based on history of customers' payments, quality of customers and age of the accounts receivable and debts is important. A big mistake made by people overly-eager to buy a business is to give too high a value to the accounts receivable without considering the chances of collection.

accretion: n. 1) in real estate, the increase of the actual land on a stream, lake or sea by the action of water which deposits soil upon the shoreline. Accretion is Mother Nature's little gift to a landowner. 2) in estates, when a beneficiary of the person who died gets more of the estate than he/she was meant to because another beneficiary or heir dies or rejects the gift. Example: if a brother and sister were supposed to divide a share of Dad's estate, but Brother doesn't want it, then Sister's share grows by accretion. 3) in trusts, accretion occurs when a beneficiary gets a surprising increase in benefits due to an unexpected event. (See: probate, trust)

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Thus, if a company sees increasing accounts receivable and inventory, it must maintain enough cash to sustain sales since the increases in accounts receivable and inventory not only requires additional cash, but also ties up the initial cash investment for those increasing current assets for a longer period.
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In addition, a fraudster who is skimming customer payments might attempt to conceal the theft by adjusting the accounts receivable balance through credits or write-offs to certain customer accounts.
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Although the firm cannot distinguish between the paying and nonpaying customers in advance, sometimes from past experiences the firm knows with a reasonable degree of certainty that a number representing a certain portion of accounts receivable will never be collected, and hence that much amount must be written off from the profit.
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The Tax Court held that the Maguires could deduct the losses from the auto dealership because they made a basiscreating economic outlay when they contributed the accounts receivable from the finance company to the auto dealership.
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At that time, a claim at Humana averaged 29 days in accounts receivable; by 2008, a claim spent 26 days in accounts receivable.
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The survey ranks payers based on a series of measures, including the number of days that claims spend in accounts receivable, percentage of claims resolved on first submission, percentage of each claim shifted to the patient, denial rate, and "transparency" of denials, including what percentage of denials are paid after one additional submission.
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