In the process of economic activity, the role of the contractor or customer can try on any association. On his accounts during settlements, receivables and payables are formed. The article examines the concept and types of accounts payable, as well as aspects of each of the categories.
Features of receivables
Today, the definition of accounts receivable means the total debt of associations, citizens and employees of a particular structure. Simply put, these are the debts of buyers for the purchased product, service or work, the debt of accountable persons for the money issued to them. Debtors are individuals and enterprises that owe a certain amount of money to a particular organization.
Accounts receivable classification
It is worth noting that there are a lot of concepts and types of receivables and payables. There are several types of categories according to the content of obligations:
- Debt related to the sale of goods, services, work or products.
- Debts not related to the sale of goods, services, products or work.
According to the duration criterion, receivables are divided into short-term and long-term. According to the timely payment factor, the following categories of debt are distinguished: normal and overdue (doubtful and hopeless).
The concept and types of accounts payable
Accounts payable, as one of the categories of legal significance, understand the relationship of a binding nature between the company and its creditors. The economic aspect is represented by the organization’s cash (most often) and inventory items. Despite the fact that the structure uses all currently known types of accounts payable, it is obliged to return or pay to creditors the due part of the property complex. Lenders, in turn, have every right to demand fulfillment of the obligation.
Duality of Definition
The nature and types of receivables and payables are largely determined by the duality of legal nature. The category is the property of the organization as one of the parts of the common property according to the right of ownership in relation to cash or things received in a borrowed way. The considered economic category, being the subject of obligatory legal relations, represents the company's debts to creditors. Creditors are persons who have the right to claim or recover part of the property complex from the said association.
Features of accounts payable
According to a simplified view, payables are a type of obligation to creditors that the organization must pay to a legal entity or individual. A complete definition implies the totality of all of the listed features. For example, accounts payable - part of the total property of the organization, acting in the form of debt obligations arising from various legal bases, to creditors, that is, authorized persons.
Mandatory Aspects of Accounts Payable
It is worth remembering that all types of accounts payable of an enterprise are subject to accounting and should be reflected in the balance sheet.
The debtor can collect debts by force when the creditor does not take any actions aimed at voluntary repayment of debts. The collection procedure, depending on the type of payables, can be both judicial and extrajudicial.
Different types of debt obligations
Accounts payable are currently understood to mean lenders of various origins. Since all types of accounts payable known from textbooks are vivid examples of sources of tangible assets held by the organization and displayed in the balance sheet liabilities. Accounting for the categories described in the article is carried out separately for each loan. Summarizing indicators indicate the total payables. It is issued only when dividing the amount into several groups.
Short-term financial improvement
The nature and types of accounts payable suggest that attracting borrowed funds to the organization’s cash flow can temporarily improve the overall financial condition of the structure. The main feature is that borrowed funds do not stay in circulation for a long time, returning according to the terms specified in the official contract.
Otherwise, there is an overdue type of receivables and payables of the enterprise. This involves the payment of the amount of the fine and the deterioration of the financial life of the company. For this reason, the composition and prescription, the causes and frequency of its occurrence of debt are necessarily studied.
Free loan
According to its definition, all types of accounts payable are free loans and are classified as cash and tangible assets attracted to the structure. Accounts payable, in contrast to stable liabilities, is not a planned source of working capital formation and is a short-term obligation for an enterprise.
The considered part of the organization is determined by laws, because it arises due to the nature of the calculations. Despite this, a violation of settlement and payment discipline leads to the occurrence of accounts payable. In fact, it is a consequence of non-compliance with the deadlines for the submission of documentation and payment for goods and services.
Short-term type of loan
The type of payables and receivables with the calculation of the short-term type used by the organization. For the formation of such funds use internal sources. The organization charges them daily according to various types of accounts. The maturity dates of obligations under this payable do not exceed a monthly period. The funds included in accounts payable, after being credited to the account, cease to be the property of the organization, since they are used only for the period indicated for the repayment of actual obligations. According to their economic content, they are a type of borrowed capital.
Classification of accounts payable by type
According to the current classification, payables are divided into several types according to certain criteria:
- To suppliers and contractors.
- Transfer of contributions on insurance property of the company.
- Transfer of contributions for personal insurance of employees.
- Bills payable.
- Founders agree with the payment of income and others.
Depending on the legal regime and the legal basis of the debt are divided into three groups:
- To employees of the organization - for example, debts on payment of wages.
- In front of the budget and social funds.
- To partners and counterparties.
Debts are classified into two categories upon payment:
- Overdue - maturity has arrived.
- Undeliverable - debts whose maturities have not yet arrived.
The structure of accounts payable includes the debt of the organization:
- To suppliers and contractors.
- In front of the state budget.
- In front of organizations and employees.
- Before state extrabudgetary funds.
- To third-party lenders.
- According to the issued loans and credits.
Distinctive features
Accounts payable, considered in the article, as a form of borrowed capital is determined by the key characteristics:
- Acts as a free source of borrowed funds. Accounts payable as a source of capital formation allows to reduce its borrowed share and total cost.
- The duration of the financial cycle directly depends on the amount of debt. It affects the amount of cash required to finance current assets. The larger the amount of debt, the less money the structure must attract to finance its own economic activity.
- The volume of economic activity of the organization, including the volume of manufactured and sold products, affects the total amount of debt. The company's expenses increase as the volume of output increases, respectively, this leads to an increase in the amount of accounts payable.
The volume of all purchases made by the structure affects the amount of accounts payable. The factors specified in the contract with counterparties, the terms of settlement with suppliers and contractors, the policy adopted by the organization regarding the repayment of payables, the saturation of the market with a specific product, the settlement system adopted in the structure, the quality and consistency of the use of the results of the analysis have no less influence.
The quality and turnover of accounts payable increases in proportion to the increase in cashless payments. Solvency and stability of the organization increases with a decrease in debt. Debt termination is carried out by the contractor.
Short-term debt
Classic short-term debt can arise both to individuals and to legal entities. The maturity of such debts does not exceed 12 calendar months.
There may be several situations in which short-term debt arises:
- In case of non-payment of goods sold, work performed or services rendered to contractors and sellers.
- To buyers according to advances received on account of future deliveries.
- To suppliers for supplies not accompanied by invoices.
- To employees related to salary payments.
- For bank loans and short-term loans.
- Before the budget and extra-budgetary funds for various fines, fees, fines, taxes and fees.
Long term debt
Allowable accounts payable are considered when its maturity has not yet arrived. Debts with a maturity of more than one year are considered long-term.
This type of debt includes:
- Long-term liabilities on loans and credits issued by banking organizations taken from other entities.
- Promissory notes and bonds with a maturity of more than one year.
- Deferred tax liabilities.
- Long-term lease obligations.
The collection of overdue long-term debt is carried out in court after filing a statement of claim submitted by the creditor. Such debts are classified as problematic and collected by court decision.