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Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit. In most business entities, accounts receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established timeframe, called credit terms [citation needed] or payment terms.
Fair Debt Collection Practices Act - Federal Trade Commission. Bill and Account Collectors - U.S. Department of Labor, Bureau of Labor Statistics. ACA International, the Association of Credit and Collection Professionals. "Inside the Dark, Labyrinthine, and Extremely Lucrative World of Consumer Debt Collection", The New York Times
Receivable turnover ratio or debtor's turnover ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets .
Beyond level 3, companies decompose process elements and start implementing specific supply chain management practices. It is at this stage that companies define practices to achieve a competitive advantage, and adapt to changing business conditions. SCOR is a process reference model designed for effective communication among supply chain partners.
Credit management and the credit manager function is often combined with Accounts Receivable and Collections department of a company. The role of credit manager is variable in its scope and a Credit Managers are typically responsible for: [1]
Accounts receivable—where the company enters money received; Accounts payable—where the company enters its bills and pays money it owes; General ledger—the company's "books" Billing—where the company produces invoices to clients/customers; Stock/inventory—where the company keeps control of its inventory
Because accounts receivable = current + delinquent accounts receivable, the DDSO formula is often defined as (accounts receivable) / (average sales per day) − (current accounts receivable) / (average sales per day) . While mathematically more complex, it is the same number. This formula can be interpreted as DSO - "Best ...
Also excluded are the accounts receivable from bankrupt customers [8] and accounts receivable that are too old [9] – usually over 90 days past due [10] (in some cases over 120 days past due. [11]) Different proportions (or 'advance rates') of accounts receivable and of the inventory are included into borrowing base.
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