Assurant Assets
Accounts receivable refers to the process of collecting money that is owed to an individual or business (a creditor) by another party (the debtor). It usually occurs when a debtor has failed to meet their payment obligations under an agreement or contract. Debt recovery can be handled in various ways, depending on the situation and the terms agreed upon.
Here are some key methods of debt recovery:
Negotiation: The creditor may start by contacting the debtor to negotiate a repayment plan. This often includes setting up a new payment schedule or agreeing on a reduced lump-sum settlement.
Collection Agencies: If negotiation fails, creditors might involve third-party collection agencies that specialize in recovering debts. These agencies charge a fee or take a percentage of the debt recovered.
Legal Action: If informal methods fail, creditors may file a lawsuit to obtain a court judgment against the debtor. If the court rules in favor of the creditor, they may be able to garnish wages, seize assets, or place liens on property.
Bankruptcy: In cases where the debtor is unable to pay their debts, they may file for bankruptcy. While bankruptcy offers a way for debtors to relieve some of their obligations, it can result in a partial or total loss for the creditor.
Debt Settlement: In some cases, the debtor and creditor may agree to a debt settlement, where the debtor pays less than the total amount owed, and the remaining balance is forgiven.
What we offer
Accounts Receivable (AR) refers to the outstanding invoices or payments that a business is owed for goods or services delivered but not yet paid for. These are essentially amounts due from customers and are considered an asset on the company’s balance sheet, as they represent money the business expects to collect in the future.
Key points about Accounts Receivable:
- Nature: It’s money that customers owe for goods or services provided on credit.
- Short-Term Asset: Since these are expected to be paid within a short period (typically 30, 60, or 90 days), they are classified as a current asset on the balance sheet.
- Management: Effective AR management is crucial for cash flow, ensuring that businesses get paid on time and minimizing the risk of bad debts.
- Credit Terms: Businesses often set credit terms that specify how long a customer has to pay the invoice (e.g., “Net 30,” which means payment is due within 30 days of the invoice date).
AR can be categorized into:
- Current Accounts Receivable: Amounts due within the short term (usually within a year).
- Non-Current Accounts Receivable: Amounts due over a longer period (typically more than a year).
Would you like more information on how to manage accounts receivable effectively or any specific aspect of AR?