Accounts receivable refers to the outstanding payments that a company is owed by its customers for goods or services that have been delivered or rendered. It is a critical component of a company’s cash flow management and financial health. Effective management of accounts receivable involves establishing credit policies, invoicing promptly and accurately, monitoring payment terms, and following up on overdue payments. This process requires coordination between sales, finance, and customer service departments to ensure that customers are satisfied and payments are collected in a timely manner. Failure to manage accounts receivable effectively can result in cash flow problems, increased borrowing costs, and damage to the company’s reputation. Therefore, it is essential for companies to have a robust system in place to manage their accounts receivable efficiently.
