Efficient Account Receivable System [creditdiagnosis]

Efficient Account Receivable System [creditdiagnosis]

Question by Jazzie: Accounts receivable credit balance treatment in the balance sheet? im confused. When a customer pays in advance, the accounts receivable will become a credit balance. what now is the treatment of this balance in the balance sheet? as a current liability? or just a deduction to accounts receivable? the same thing with accounts payable. when it has a debit balance, what does this indicate? thanks for the help.^^ Best answer for Accounts receivable credit balance treatment in the balance sheet?:

Answer by Sandy
If the credit balance is immaterial, you can leave it in AR, but if it's material, you need to reclassify it out to payables, and the same logic for debit balances in AP.

[credit balance in accounts receivable]

Learn A Level Accounting Podcast from Prof. Accounting. Topic: Control Accounts - Credit Balance in Sales Ledger *** Rate and Comment *** After watching please RATE this video and make any appropriate comment about it. If you have any questions relating to it please comment on the video podcast to share with all. | Prof. Accounting |

http://leafgardenpress.com/ A Level Accounting - Control Accounts Credit Balance in Sales Ledger - Episode #3 - Prof. Accounting

insideARM.com July 18, 2012 (Be the first to respond) http://www.insidearm.com/daily/credit-card-accounts-receivable/credit-card-receivables/cfpbs-first-enforcement-action-scores-140-million-consumer-refund-from-capital-one/ ... These products included ... CFPB's First Enforcement Action Scores 0 million Consumer Refund from ...

It is normal for businessmen to be torn between selling their products through credit or cash. Of course, an upfront payment is always preferable, but credit, when managed properly, can also bring greater sales as the client becomes more encouraged to be a constant customer. Allowing someone to buy something through credit is a way of building a relationship between a seller and a buyer. But while this can bring forth positive developments for the company, it can also be a cause for headache. Not all people who will initially qualify for credit purchases will actually turn out to be reliable. A few of them will be delinquent in their payments and this is one thing businessmen should learn to handle efficiently.

Payment that has yet to be collected are called accounts receivable. A person, for instance, purchases a laptop for a certain amount. The transaction automatically falls under account receivable when the buyer and the seller agree that the amount will be settled at a later time, whether as one payment or in installments.

Once more, not all those who seem trustworthy enough will actually be trustworthy, so the challenge for business owners now is to use techniques or grow a skill for minimizing losses from unsuccessful account receivables. Because the benefits of allowing people to buy through credit can be great, the perfecting the skill of making sure payments is made when they are due becomes essential.

The issue of account receivables becomes all the more important for small and struggling businessmen, which are only beginning to make a name for them. It still remains doable given the right ways of managing this particular department of the business.

There are even many basic ways to handle credit collection that are also highly effective.

Naturally, the first thing a businessman needs to consider is getting a background on the customer who is planning to pay for a product or service through credit. This can be done by asking the person for credit references. This way, a person’s tendency to be a responsible or irresponsible payer can be gauged. When handling new accounts, a good way to allow credit purchases but limit damages is to minimize the allowable credit amount. This way, losses, if any, can be contained.

Another basic practice is to always verify account numbers, expiration dates and credit balances when accepting orders through credit cards. One thing that must be ensured is that the name of the person placing the order is exactly the same as the name of the to-be recipient for products or merchandise to be shipped.

Essential to any company accepting credit purchases is keeping track of their customers’ paying habits. By dong this, the credit department can easily spot good payers and bad payers and this information can be used by officers who are handling credit application approvals.

Account receivable software must be efficiently laid out and in place for any company to avoid unpaid purchases and eventual losses. medical accounts receivable is also a good investment as it helps to minimize the risk of human error and keep the system working efficiently.

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