In the modern world, a special place in the management of any enterprise is occupied by all kinds of accounting articles. The material below discusses in detail debt obligations called “receivables and payables”. This is one of the most relevant articles responsible for compliance with financial agreements between the two organizations, since even minimal non-compliance with its part of the agreement immediately affects the ratio of receivables and payables for each of the legal entities under consideration.
Debentures
The cycle of economic and financial activities of any modern enterprise is the reason that there are receivables and payables. This may be funds received from settlements for any tangible assets or services provided; as well as released and sold products in the form of various goods, etc. All the above positions are reflected in accounting. Thus, receivables and payables are debt obligations of other organizations to the enterprise in question. Let us consider in more detail each of these concepts in order to more fully understand the difference between them.
Accounts payable
This term represents all kinds of debts of a particular enterprise under consideration to other legal or cooperating individuals, individual entrepreneurs and other related services. Consequently, the debts of the organization to suppliers of raw materials or finished products, which will subsequently be involved in the main production process, can be safely attributed to the above category; to contractors - for the services and work provided by them; in front of their own employees (wages for their work for the benefit of the enterprise). In addition, this accounting article includes various payments to extrabudgetary and budget funds.
Accounts payable means obligations that arise gradually and continuously as the formation and further development of the economic activity of the enterprise in question. One of the very first debts can be considered debts to the founders. They appear at the time of creation of the authorized capital. Subsequently, all kinds of obligations arise and to various banking institutions. It is believed that after them debts to suppliers are formed, since they provide all the materials necessary for starting work. Fourth in this list are tax deductions based on performance.
Accounts receivable
This concept implies all the obligations of any institutions that represent legal entities, as well as individuals acting as individuals, to the enterprise in question. In this case, the debtors are called debtors. This category traditionally includes the debts of accountable representatives for the money issued to them; obligations of customers and buyers of finished products or services provided; loan repayments and much more. It is only natural that the ratio of receivables and payables inclines in our favor. It is inherent in human psychology that it is much more pleasant to receive finances from someone than to give your money to someone else. However, in any case, you should not fully rely on the amounts that must be returned, because if they are not transferred on time, there is a risk that the company will incur losses. Consequently, it is the responsibility of the accounting department to comply with a strict record of all obligations. This means that it is necessary to control the period of accounts payable and payment of receivables.
Turnover period
Often financial calculations require finding the above value for the further successful operation of the enterprise. All the necessary data for this can be taken from the periodically compiled balance sheet. Thus, the turnover of receivables and payables is subject to planning and subsequent control. The higher this indicator, the greater the positive trend is. Turnover is characterized by indicators of liquidity and quality. They illustrate the speed of the process under consideration, with which the funds received will turn into cash.
Main characteristics
Receivables and payables are estimated using turnover ratios. They are calculated as the ratio of the amount of revenue received to the average value of liabilities. In addition, the presented indicator can be calculated in days. In this case, it will characterize the period for which the funds in question make their circuit. Therefore, receivables and payables are integral parts of accounting.
Accounts receivable turnover ratio
This indicator is calculated on the basis of the following data: revenue from goods and services sold, average debt indicator. To find the desired coefficient, it is only necessary to divide the first value by the second. Thanks to such calculations, you can find out the number of times the formation and replenishment of obligations for the study period.
Accounts payable turnover ratio
Of course, the receivables and payables of the enterprise should be considered in aggregate. This will allow you to track and timely take measures to improve the circumstances. An unfavorable situation is one in which the payables turnover ratio will significantly exceed the receivables.
Property Inventory
An inventory of receivables and payables is necessary primarily to verify the truth of the values ​​recorded on the bank accounts of the enterprise. To do this, carefully compare the data on your own account with the values ​​obtained from the so-called counterparties. Subsequently, an act of reconciliation of previously performed calculations is drawn up, which is then sent for approval and signing to the appropriate authorities. It is important to pay attention to the fact that the above documents are not the primary point from which the inventory of receivables and payables begins, but are used only to confirm the performance of any business activity. Indeed, during the course of the process in question, the financial condition of any of the parties is not exposed to any changes. The signing of the reconciliation certificate only indicates that the counterparty recognizes the presence of debt between you.
The effectiveness of ongoing activities
Both the timing and the procedure for conducting an inventory are established by the leaders of each enterprise, therefore, for different organizations these procedures may have some differences. The so-called "management tip" issued an order that describes all the required actions and periods. Of course, this has nothing to do with the compilation of the mandatory inventory carried out following the results of the outgoing year. The result of such events allows you to achieve many goals. We list some of them:
1) clarification of receivables for sold, but not yet paid products (goods or services);
2) adjustment of accounts payable for the above items;
3) determination of the limitation period for each individual counterparty, it is necessary to consider all the agreements and agreements concluded between the parties represented;
4) identification of balances of other payables and receivables in relation to a specific date of the property inventory.