Thursday Biz TiP: Definition of Financial Terms...
Accounts Receivable: The money that is OWED to YOU for services or products sold to your clients or customers. Accounts Receivable are CURRENT Assets...no longer than a year old.Payment terms are established as part of the sale:
For example, JoAnn's Plumbing Services has installed a hot water tank for Mr Brown. The agreement of sale states the payment terms. The terms could be IMMEDIATE, 10 Days, 30 Days, whatever is stated on your bill. Make sure your terms are CLEAR and UNDERSTANDABLE!
Banker Tip:
Going for a loan? You are judged on how QUICKLY your Accounts Receivables are collected. If you allow them to drag out to 90 -120 days...they are seen as not good. Be careful of collection time...it can count against you.
Want to be in charge of your business...take the time to learn not only the "book" definitions of financial terms...but how they REALLY IMPACT your Business. Give JoAnn Forrester "The EmpressofBiz" a call at 412-440-6969.
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