Receivables collection period formula. Accounting receivables Accounts receivable payments

Accounts receivable are the financial and commodity assets of a company working for the counterparty as a result of a transaction, agreement, etc. The role of the counterparty can be buyers, contractors and other accountable persons. Accounts receivable relate to the company's property (its assets) and are subject to inventory, regardless of the maturity date.

In simple words, the concept of a company's receivables is the amount of debt that has not yet been returned to the borrower for certain services or goods.

Here is an example of accounts receivable:

The MAX company specializes in the production of building mixtures. He has several debtors (debtors), these are companies that do not have the financial ability to pay for the goods immediately. The two parties enter into an agreement indicating the repayment period of the debt and all the nuances in case of non-fulfillment. Thus, the MAX company, without refusing a loan, will receive economic profit in the future.

2. What is the difference between accounts receivable and accounts payable?

With accounts receivable, your company has debtors, and with accounts payable, you are the debtor. On the one hand, the absence of receivables indicates the company’s caution, since not all debtors ultimately have the opportunity to repay the debt. But even in this case, the company deprives itself of potential income from bona fide counterparties.

Regarding accounts payable, the same story, it high level indicates the company’s problems, and absence demonstrates the success and profitability of the business on our own. But since KZ is third-party capital, it would be foolish not to take advantage of the opportunity to develop at the expense of other people’s investments. It follows from this that it is not the presence itself that matters, but the volume and ratio of receivables and payables.

3. Types of receivables

There are many criteria by which types of receivables can be classified, but we will turn to the main ones.

Depending on the repayment period:

Depending on receipt of payment:

To avoid serious consequences of non-payment of debt, firms create reserves for doubtful debts. The volume of reserves is approved individually, it all depends on the financial situation of the debtor and the likelihood of repayment of obligations. A provision for doubtful debts is established after an inventory has been taken.

4. Enterprise accounts receivable management

There are often situations when an enterprise, in an effort to increase profits, begins to overload itself with debtors, which can ultimately lead to a large amount of unpaid debt and even bankruptcy of the enterprise. Reasonable managers pay great attention to the volume of debts and keep strict records of receivables using various instruments, for example Excel.

Accounts receivable management methods:

• Strengthening work with accounts receivable - collecting debts without resorting to the help of judicial authorities.
• Balance control and analysis of accounts payable and receivable.
• Motivation of sales department employees (regarding taking measures to ensure the fastest possible return of funds from debtors)
• Count real value DZ, taking into account the possibility of its sale.
• Creation of a sales system in which payments will be made regularly and guaranteed, for example, a system of discounts for punctual customers.
• Calculation of the maximum level of accounts receivable.
• Audit of losses from remote work (what profit the company could have received in case of instant payment and use of this money).

With proper control and management of receivables, an enterprise can protect itself as much as possible from the risks associated with non-payment of debts, decreased solvency and lack of working capital.

5. Inventory of accounts receivable

An inventory of accounts receivable is a reconciliation of documents with counterparties, confirmation of the existence of debt and its size. They carry out an inventory before an annual report, a change of chief accountant, during the liquidation or reorganization of an enterprise and in case of emergency situations, such as a fire.

The inventory is carried out on a certain date, the company sends data on the debt to its borrowers, and they must confirm or deny in writing the existence and amount of the debt. This is ideal, but in reality not everything is so smooth, firstly, inventory may take a large number of time, in some companies the indicators reach up to a month. Secondly, not all debtors respond to requests, especially those whose debt has been waiting for a long time to be repaid.

The next problem is resolving data inconsistencies; in this case, you have to reconcile all transactions performed with a given enterprise; this creates particular difficulty if the enterprise is located in another city or, even better, in another country. When sending a certificate of receivables, you need to take into account the fact that an enterprise can be both a debtor and a creditor at the same time. Even if, according to calculations, you turn out to be a debtor, you need to send a statement, indicating the amount of both receivables and payables.

After reconciliations, the company must draw up an inventory report; some set their own form template, or use a standard one, for example: sample 1 (download).

6. Accounts receivable turnover

Accounts receivable turnover shows how quickly a company receives payment for goods and services sold.

The accounts receivable turnover ratio shows how effective measures the organization is taking to minimize debt. This metric quantifies how many times a firm has received payment during a period equal to the average outstanding balance from its customers.

*Average accounts receivable balance is calculated as the amount of accounts receivable from customers according to the balance sheet at the beginning and end of the analyzed period, divided by 2.

Turnover formulaaccounts receivable:

Accounts receivable turnover period in days formula:

*TLC in days shows the number of days during which the debt remains unpaid.

As such, there is no norm for the turnover ratio; it will be different for each industry. But in any case, the higher the OPL, the better for the organization, this means that buyers quickly repay the debt.

7. Collection of accounts receivable

Any enterprise faces the problem of non-payment of accounts receivable. Of course, the buyer may have various valid reasons, but who cares? The company wants to recover its money for the goods provided.

Receivables can be returned different methods, for example, hire the mafia, but if it’s legal, then it’s better to file a claim or go to the courts. If you decide to resolve the conflict amicably, you should send a complaint to the debtor to clearly explain your position and find out whether he has any reasonable objections.

When applying for collection of receivables, you must indicate the following points:

• Call
• Detailed calculation of the amount of debt incurred
• Interest calculation
• Debt repayment deadline
• Warning about going to court

In addition, the claim must be signed by an authorized person, and copies of all documents related to the debt must be attached. If the debtor received your letter (there must be evidence) and did not respond within the established time frame, then with a clear conscience you can go to court demanding the return of receivables.

8. Write-off of accounts receivable

By law, a debt is considered overdue if the statute of limitations on the debt has expired (3 years) and bad debt if the company is unable to pay the debt. On these grounds, the company has the right to write off the debt. The write-off of hopeless overdue receivables is permitted on the final day of the period in which the statute of limitations has passed.

There are two methods for writing off expired accounts receivable. The first is to use the reserve for doubtful debts for this purpose; if a reserve was not provided for this debt, then write it off as financial results. Postings for writing off accounts receivable must be carried out exclusively for each obligation separately. The reason for this may be the results of the inventory, written confirmation or an order from the head of the enterprise.

Sample order to write off accounts receivable: sample 2 (download).

Writing off a bad debt is not an actual cancellation of the debt, therefore, for five years after the write-off, receivables are reflected in the balance sheet. And throughout the entire period you need to monitor financial condition debtor, whether he has the opportunity to repay the debt.

9. Accounts receivable report

It is important for a manager to have an idea of ​​how much funds he can use, when the next receipts will be, and, based on the report, to think through his actions regarding finances. Also, according to the report data, it is possible to assess the receivables of each client, who makes payments responsibly, and who does not even understand the importance of timely payment of the debt.

Sample breakdown of receivables and payables sample: sample 3 (download).

10. Sale and purchase of receivables

If you do not have the slightest desire to deal with debtors, but want to return the funds, you can sell the receivables, if there are persons who would be interested in this. Often these are people who themselves have a debt to the debtor. The company has the opportunity to buy receivables at a lower price, at a discount, so to speak, and then present documents to the debtor and demand repayment of the debt at full cost. To sell a debt, the debtor’s consent is not required; it will be enough to notify him of the sale of the debt.

Optimization of the enterprise sales system and minimizing risks in working with receivables and payables

DEFINITION

Using the amount of receivables, the monetary obligations of third-party counterparties are reflected. Accounts receivable includes funds for shipped products (services provided) not paid by customers.

The formula for the repayment period of receivables reflects how quickly funds for products (services) will be returned, while characterizing the effectiveness of interaction between the company and counterparties. At the same time, the higher the accounts receivable turnover ratio, the faster the company makes settlements with its customers.

The formula for the repayment period of receivables is a way to increase the profitability of an enterprise, since the calculation of the indicator for it shows the dynamics of receivables. Accounts receivable management is about increasing turnover. This is possible by increasing revenue or reducing accounts receivable.

Accounts receivable period formula

There are two options for calculating the receivables collection period formula, with the first option being calculated as follows:

DSO = (360*DZsr) /V

Here DSO is an indicator of the receivables repayment period,

DZ av - average amount of receivables (for example, average annual),

B is the amount of revenue.

The second option for calculating the formula:

DSO = 360/RTR

Here RTR is an indicator of accounts receivable turnover.

The average annual amount of accounts receivable (AAR) can be calculated by summing the values ​​of accounts receivable for each day and dividing by the number of working days.

The second option for calculating the formula is carried out by summing the values ​​of accounts receivable at the end of all months and then dividing by 12.

If only annual data is available (at the beginning and end of the year), then they are added and then divided by 2 (or multiplied by 0.5).

DZsr = (DZng + DZ kg) / 2

Receivables turnover formula

The calculation of the receivables turnover ratio (RTR) is necessary for the second version of the formula for the repayment period of receivables and is determined by the data of the balance sheet (Form 1) and the report on financial results(forms 2).

The general formula for accounts receivable turnover is as follows:

RTR = V/DZ

Here RTR is the accounts receivable turnover ratio,

B is the company’s revenue for the corresponding period,

DZ – the amount of receivables (for example, the average for the year when calculating annual values).

The value of the receivables repayment period

The accounts receivable period is a tool for determining the effectiveness of customer relationships, reflecting the time they pay invoices. Using the indicator, you can evaluate the payment discipline of customers.

By applying the formula for the repayment period of receivables, analysts calculate the level of effective management of receivables. For example, if an enterprise has established a maximum period for consumer commodity lending of 15 days, then the repayment period for receivables should not exceed this value.

Examples of problem solving

EXAMPLE 1

EXAMPLE 2

Remote assets are one of the most liquid assets of any company. Therefore, the company can sell it, transfer it, exchange it for property, products, the result of providing services or performing work. It should also be taken into account that with large amounts of deferred payments, there may be a lack of funding for the organization itself.

The majority of accounts receivable are unpaid invoices (or invoices receivable) for products delivered. But there is also a specific element - these are bills receivable, which are, in fact, commercial securities.

Types of remote sensing

There are two groups of items in the asset balance sheet sections:

• Short-term loan - repayment is expected within a year after the reporting date.
• Long-term - more than 12 months, respectively.

Depending on how the DM was formed, 3 types can be distinguished

• Normal. It arises during the implementation of the enterprise’s production tasks and is determined by the current forms of payment. When the organization operates as usual, payment occurs within one month.
• Acceptable. This category includes advances for the purchase of agricultural products, claims against contractors for short supply of material, debt of accountable persons, and similar negative examples.
• Unjustified. May arise as a result of violation of discipline, both settlement and financial. Debts can also be caused by deficiencies in accounting, shortages, or theft.

PD can also be divided into

• Real, which debtors will probably be able to repay on time.
• A dispute that an enterprise can settle through legal proceedings.
• Hopeless, the prospects for payment of which are virtually zero. When the statute of limitations expires, it will be necessary to write off the “debt” at a loss.

If we consider debt as an accounting object based on the payment term, then it can be

• Deferred, the maturity date of which has not yet arrived.
• Overdue, for which the deadline for fulfilling obligations has already arrived.

DZ insurance

The receivables insurance mechanism is as follows:

• The organization and the insurance company enter into an agreement. It must define and clearly state the key terms of the insurance contract. This includes a complete list of insured events and the procedure for assessing the financial situation of debtors.
• The insurer, together with the policyholder, determines the composition and volume of receivables that will be subject to insurance. It is important to consider that the insurance company will not insure the liability as a whole, but will necessarily assess the risks of non-payment for each client of the insured.
• If an insured event does occur, then the insurer pays the insured company the amount of the insured liability minus that part of the debt amount that will be written off as the latter’s expenses. After this procedure, all claims on the debt are transferred directly to the insurance company.

Before concluding such an agreement, an enterprise is still recommended to compare the upcoming costs and possible benefits from this type of insurance.

It can be concluded that in order to ensure competitive commercial conditions for its counterparties (debtors), organizations should find a additional method financing your own expenses. This is the most rational approach, because an increase or decrease in the amount of receivables has a tremendous impact on the turnover of capital invested in current assets, and, as a consequence, on the overall financial position of the organization as a whole.

This happens when the buyer cannot immediately pay the full cost of the goods to the supplier and the latter has to make concessions and count on the customer’s integrity. It is the repayment of receivables that raises many questions for both parties to the contract: how long should repayment be made; is there a special formula for calculating it; What are the most convenient ways to pay off debts? All these questions will be answered in this article.

General information

Repayment of accounts receivable is the process of paying debts that arose as a result of economic relations (purchase of goods or services) between an enterprise and another individual or legal entity. The parties to the agreement regarding debt are the collector and the debtor (No. 229-FZ, Art. 48). Each of the concepts is described in more detail in the Federal Law “On Enforcement Proceedings”.

This procedure is accompanied by the determination of the circle of persons to whom claims can be made. Despite the fact that the defendant is a party to the transaction that did not fulfill its obligations on time, government agencies can involve other persons in repayment of the debt who did not take part in the transaction, but are related to the debtor. Such persons may be the founders of the enterprise if it is declared bankrupt (if he is the culprit in the liquidation of the company) or the parent organization (if its branch was declared bankrupt).

The process of repaying the borrower's debt is conventionally divided into the following stages:

1. Determining the existence of a debtor's debt.
2. Identification of the need to seize receivables.
3. Arrest of debt.
4. Determination of the market value of debtor non-payments.
5. Sale of debt (if the auction is cancelled, it is sold on commission).

Debt collection methods

Claim collection procedure

A claim is a document addressed to the debtor in case of failure to fulfill the terms of the contract. The form for filing a claim is written. In it, the claimant must indicate the reasons for writing this document, the reasons for the debt, referring to certain terms of the contract, as well as the requirements for the debtor and the timing of consideration of the claim. The act is signed by the head of the enterprise. In addition, the document must be accompanied by a package of papers on which the claims against the debtor are based.

Before going to court, the creditor must resolve the problem by sending a claim to the borrower. Using this a budget option, the entrepreneur will be able to quickly get his own money back Money. If you ignore this method of debt collection, be prepared to be denied a court hearing.

Litigation

Without waiting for a response to the claim from the borrower, the entrepreneur has the right to file statement of claim to the arbitration court. The application form is written. The deadline for filing an application should not exceed 3 years from the moment the founder learned about the debtor’s existing debt. If this rule is not observed, the court has the right to refuse to consider the filed claim. Other requirements for a claim are set out in the APC, Art. 125.

Before submitting documents to the court, the creditor must send a copy of them to the borrower.

Taking interim measures

An interim measure in a particular case is the arrest of financial assets or property of the debtor that has material value. However, the arbitration court may apply other penalties (APC, Art. 91).

To seize the arrest, the founder must submit to the court an application to secure the claim, indicating the name of the court, information about the debtor and plaintiff, the subject of the dispute, the amount of debt and the interim measure, carefully justifying his request and attaching a package to it necessary documents. The amount of the state duty is prescribed in the Tax Code of the Russian Federation, Art. 333.21, paragraph 1, paragraphs. 9, and amounts to 3,000 rubles. Review of documents occurs the next day after submission of the application.

To seize the property, the founder must submit an application to the court to secure the claim, carefully justifying his request and attaching a package of necessary documents to it.

Conclusion of a settlement agreement

A settlement agreement is an agreement between the parties to a contract to terminate litigation on the basis of mutual concessions. Its approval is carried out by the arbitration court in the presence of the parties to the contract. He also indicates the deadlines for fulfilling all the terms of the agreement. If they are not fulfilled, the claimant has the right to file a petition in court.

Debt restructuring

This method will help the debtor pay off debts thanks to concessions from the creditor. These may be:

• Reducing the amount of debt.
• Increasing the debt repayment period.
• Reducing the amount of the penalty.

In this case, the entrepreneur lays claim to the tangible property that belongs to the borrower.

Debt repayment terms

The receivables collection period is the period of time when a company expects to receive money from products sold. It determines the turnover period of the debtor's debt, taking into account the change in the amount of revenue from goods or services sold.

Formula for calculating the repayment period for receivables:

DSO = DAP x (AR / NS),

where DSO is the maturity date (calculated in days), DAP is the length of the period, AR is the receivables (in rubles), and NS is sales revenue (in rubles).

Repayment of receivables has a specific deadline and a special calculation formula, thanks to which both parties to the contract can control payments. This issue can be resolved peacefully, knowing all the pitfalls of this method. However, if the debtor fails to comply with these deadlines, the collector has the right to choose any of the methods convenient for him to collect debts and apply to the arbitration court.