You, who has a business in the United States, know how important it is to know each of the words used for legal and administrative matters, such as accounts receivables. If you want to know more about it, here we clarify that term.
Accounts receivable is simply the money that is owed to you, either for the work you did as a contractor or materials that you supplied a contractor. These accounts receivables (especially invoices) are given by companies to trusted clients.
Remember that a healthy business has its accounts well organized: how much you owe, but also, how much people owe you, because, without capital for your business, it’s difficult to grow.
To calculate your accounts receivables, you should consider the following:
- The bills people owe you
- The contracts that are yet to be paid to you
Another type is the IOU, which means “I owe you.” These are informal documents that record debt, and in which the debtor agrees to pay either with money, inventory, or material. However, you must be careful because these documents are signed “in good faith” and it is difficult to make them be valid in trials and other legal matters.
What If You Have Too Many Accounts Receivables?
It is not recommended for your business to move forward without claiming money stuck in accounts receivables.
You have two options: take your debtors to court (which may cost you more money than they owe), or sell your bills and contracts to a factoring company like Cultiva Financial.
Cultiva Financial a factoring company for Latino contractors, entrepreneurs, and suppliers. We can help you get your money from accounts receivables or invoices that are owed to you.
Sources: Investopedia, Accounting Only
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