Accounts receivable assessment: methods, features of the procedure, examples

In the process of carrying out business activities, receivables (DZ) arise. This may be the amount of funds for the delivery or the value of the goods, which the creditor plans to receive at the agreed time. Remote sensing is recorded in the balance sheet at actual cost and includes settlements: with buyers / customers; on bills; with subsidiaries; with founders on contributions to capital; in advance. At the same time, the nominal value of the indicator in the control unit is the upper limit of the cost. Since debt is repaid slowly and money depreciates over time, the real market value is often lower.

When and why is the analysis carried out?

Evaluation of accounts receivable is a procedure for determining the market value of subsidiaries at a specific date. It is carried out taking into account the terms of its appearance, repayment and legal grounds. DZ, like any other asset of an enterprise, has a certain value. At its core, it is a bill or promissory note that is in circulation on the market. The need for the assessment of receivables arises when conducting a financial analysis of an enterprise, assigning claims, litigation / out-of-court proceedings. The same need may arise when reaching a remote sensing capacity of 30% of the volume of real assets. In this case, it begins to significantly affect the future economic activity of the company.

In international practice, timely repayment of debt is the key to profitable activities. If the debt is not repaid within the prescribed time period, the business reputation of the debtor deteriorates. This principle provides for high liquidity of subsidiaries, which is reflected in high liquidity ratios. That is, the amount of debt depends on solvency - the higher the liquidity, the faster the company repays its debts.

Types of debt

Analysis of receivables provides for its ranking. Depending on which category it falls into, this or that assessment method is used. There are several criteria:

• The reason for the formation: justified or not. The second category includes debts that were formed due to incorrectly executed documents.
• Duration of education: short-term (payments are expected within 12 months) and long-term.
• Outstanding debt is considered to be overdue. It provides for a limitation period of three years (Article 196 of the Civil Code). During this time, debt can be collected or sold. Then it is subject to write-off.
• Whenever possible, repayment of DZ is divided into doubtful and hopeless. The first includes debt arising from the sale of goods if it is not repaid within the time period specified by the contract. Debt from previous years can be repaid even after cancellation.

Validation algorithm

At the first stage, an analysis of the object as a whole is carried out. General indicators are examined to identify possible conflicts of interest. A list of indicators is compiled, according to which an assessment of receivables will take place. Information is collected on the state of the market, accounting reports are being studied. Based on the data obtained, the market value of the company is determined. At the final stage, the assessment results are agreed with the founders and a report is prepared.

What is taken into account?

In the process of evaluating receivables, it is very important to take into account its specificity. This asset is not a commodity. Its implementation is carried out only by the assignment of rights to claim debt. Therefore, when assessing it is important to determine the amount of debt, the periods of formation and repayment, and also to analyze the rights to debt: the availability of contracts, payment documents, reconciliation acts.

The legal position of the company is closely related to the legal aspects. If the debtor is at the bankruptcy stage, then debt repayment is carried out first to creditors of the first stage, and then to the second and third. And the organization does not always have enough funds to meet the needs of all creditors. Therefore, the appraiser, having information that the debtor is at the bankruptcy stage, must determine the amount of the bankruptcy estate, the possibility of its repayment and the sequence of creditors. In practice, the auditor does not always have all the information about the financial condition of the enterprise. Therefore, in the report he should describe in detail the conditions for the inspection.

Calculation Methods

In practice, they use such methods for assessing receivables: costly, profitable, comparative. Although today most of the transactions take place within the framework of the auction, there is not enough information in open sources to conduct an assessment, therefore, a comparative approach is not used. The cost approach provides an estimate of the carrying amount, but in this way it is impossible to determine the real value of the object. Therefore, in practice, the income approach with discounting the amount of repayable debts is most often used:

PV = C / (1 + R) ^ n, where:

• PV - current value;
• C is the future value;
• R – discount rate (lending rate + risk-free rate);
• n - maturity.

No risk data and discount rates are presented on the CBR website.

How to determine market value?

The algorithm is as follows:

1. Determine the total amount of debt under the contract, taking into account fines and penalties.
2. Identify sources and maturities.
3. Calculate the amount of expenses required to recover the debt.
4. The net income is discounted at the measurement date.

When is the assessment carried out? Such a need arises in two cases: when evaluating the business as a whole and the rights of claim as a separate asset. In the first case, the debt is considered as part of the assets of the enterprise, since the assessment of only remote sensing does not take into account all the trends of the enterprise. The analysis of accounts receivable consists in ranking it according to the criteria and evaluating each group based on its turnover and the state of the company. If DZ is evaluated as an independent asset, then the legal aspects of its occurrence are analyzed in detail, and the market value is determined by the income method.

Accounting with customers in BU

To account for receivables in the balance sheet, the following accounts are used: 1210 (80) “Short-term receivables (buyers and customers)”. The account 1280 takes into account interest and interest-free bills received and the expenses secured by them. All advances received are reflected in account 1610. After the shipment of goods, the account is debited from 3310 “Short-term debt to suppliers”.

In the process, the company incurs future expenses, that is, pays for services that will be used for several months. So, accounting writes out periodicals, buys insurance policies, pays rent and utility bills for several months in advance. Accounting for receivables is reflected in the debit of account 1620. As services are received, expenses are written off to the credit of accounts 7110 “Sales expenses”, 7210 “Administrative expenses” and the corresponding accounts of section 8 “Production accounting accounts”.

In the process, an enterprise can provide loans to other organizations, lease fixed assets. Where are such receivables recorded? On account 1270. The amounts received are debited to the credit of account 6110. The company can also provide loans to the employee and issue amounts for reporting. Where are such receivables recorded? On the account 1250. The received amounts are debited to the corresponding accounts.

Postings

Debt on settlements with employees has its own nuances. So, a person may not return on time unspent money or incur expenses that have not been agreed in advance. How are receivables accounted for in this case? Postings:

• DT1250 KT1010 - money was issued from the cash desk.
• DT1310 KT1250 - materials purchased.
• DT7210 KT1250 - travel expenses are written off as administrative expenses.
• DT2413 KT1250 - purchase of cars.
• DT1250 KT1280 (2180) - deducted in respect of pecuniary damage.
• DT3350 KT1250 - withholding the amount of damage from wages.

Doubtful debt

No matter how good the system of controlling the solvency of buyers has been established, the company will have buyers who did not pay their debts on time. Such a debt may be considered doubtful if it is not guaranteed. In this case, a reserve is created as a percentage of the cost or due date of payment. Creating a reserve is carried out by wiring KT1290 DT7440. The written-off amounts are reflected in accordance with 1290 in 1210, 1280. The amount of unused reserve is stroned by wiring: DT7440, KT1290.

Bad debt

According to Art. 266 of the Tax Code of the Russian Federation, debts to an enterprise are recognized as hopeless, for which:

• the statute of limitations has expired;
• the obligation is terminated due to the impossibility of its performance;
• there is an act of liquidation of the organization.

Accounts receivable are recorded on account 63 until they are written off, that is, within three years (Article 196 of the Civil Code).

Debt of past years

The limitation period may be interrupted, for example, if the customer sues to challenge the amount owed. If this nuance was not taken into account when writing off the debt, then during the next inspection the Federal Tax Service will reveal this error and charge a fine for unjustified understatement of tax obligations. The company will have to recover receivables. The postings are as follows:

Option 1:

• KT007 - recognition of written-off DZ.
• DT62 KT91.1 - debt restored.
• DT50 KT62 - decommissioned DZ.

Option 2:

• DT76 KT91.1 - recognition of the deducted amount in “Other income”.
• KT007 - debt recovery.

The first scheme is used for reasonable, and the second for erroneous write-offs. Restoring receivables from previous years may cause accounting errors. Therefore, after recovery, you should once again calculate other income in the accounting and non-operating income in the accounting. In case of deviations, changes should be made to the reporting documents.

Account receivable measurement example

The line "DZ" of the company reflects assets in the amount of 445,000 rubles. The information was taken from the balance sheet on 12/31/16 and the balance sheet on account 63. The table below presents the analysis of receivables.

The market value of bad debts is nullified. Overdue debts are discounted at the weighted average interest rate at the valuation date presented on the statistics website of the Central Bank of the Russian Federation. The average turnover of money is 391 days (the period from the moment of debt formation to the balance sheet date). This period corresponds to a discount rate of 12.86%.

The calculation of the risk premium is presented in the table below.

Accordingly, the discount rate is 12.86% + 6.25% = 19.11%

The table below provides an assessment of the effectiveness of receivables management.

Here's how accounting for receivables is assessed.