Receivables refer to the amount owed by companies and individuals collected in terms of cash. As such, receivables are considered important since organizations' liquid cash in many countries globally (Weygandt, 2009) . There are several types of receivables such as accounts receivable, notes receivable, as well as, other receivables. As such, accounts receivable represent the amount that the customers owe a certain company as a result of the sale of products and services, therefore, it is important to a company. In case products and services are sold to the esteemed clients, the accounts receivable and the sales revenue gradually increase. Organizations record the accounts receivable on the balance sheet for credibility.
The main method used to account for bad debts is known as the allowance method for uncollectible accounts, whereby, at the end of each period the uncollectible accounts are estimated ( Lazaridis, 2016) . The amount that a company expects to receive in cash from the receivables is known as cash net realizable value. However, many companies often use factors to increase the collection of receivables. As such, a factor is referred to as a bank or a company the buys receivables at certain amount and collects payment from the customers without involving a third party.
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Practitioners consider managing accounts receivable due to numerous reasons. For instance, it aids in building customer loyalty, identifies the uncollected profits, and, track clients' credit. An increase in the accounts receivable management efficiency leads to growth and development in many organizations (Michalski, 2015) . As such, there is a positive outcome since a gradual increase in the sale of products and services increases the gross domestic product which improves a state's economic growth. The managers should hire competent individuals to ensure that they deliver quality services to the clients.
References
Lazaridis, I., & Tryfonidis, D. (2016). Relationship between working capital management and profitability of listed companies in the Athens stock exchange.
Michalski, G. (2015). Accounts receivable management in nonprofit organizations. Zeszyty Teoretyczne Rachunkowości , 68 (124), 83-96.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2009). Managerial accounting: tools for business decision making . John Wiley & Sons.
