Accounts receivable and accounts payable - the most important indicators of the enterprise

The work of any firm is assessed by a set of indicators, and all of them characterize various aspects of its activities. Thus, the volume of production shows the capacity of the enterprise, the profitability - its economic efficiency, the supply of resources - the stability and reliability of supply. Accounts receivable and accounts payable are important indicators of the company's financial health. About what they mean and how to manage them, we'll talk in this article.

First of all, it is necessary to define such concepts as accounts receivable and accounts payable. These concepts are directly opposite in their economic sense. Accounts receivable represent the amount owed to the enterprise by its counterparties - buyers, suppliers, authorities and so on. Sometimes it happens that the counterparty's debts are some tangible assets that have already been paid for, but have not yet been delivered. Despite the fact that the real object of debt is commodities, their monetary value is still displayed in the balance sheet.

Accounts payable are the amount that the enterprise owes to other business entities or government agencies. Thus, accounts receivable and payable are, on the one hand, opposite, and on the other - closely interrelated concepts.

In general, the existence of arrears is a normal and acceptable phenomenon within certain limits. If the debts exceed these limits, then the probability of a crisis is high. In case of exceeding the acceptable thresholds by accounts receivable indicators, there may be problems with liquidity, and in the case of a creditor - with the solvency of the enterprise.

Proceeding from the foregoing, the most important task of the financial management of an enterprise is the management of receivables and payables. This process is entrusted to the highest level of leadership in the field of finance. Its components are:

• Accounts receivable and payable,
• Forecasting of future debt indicators,
• Establishment of maximum allowable amounts of debt,
• If necessary - taking measures to adjust indicators that do not meet the requirements of the management.

Accounting of arrears is carried out in special items of the balance sheet, as well as in the accounts of accounting. At the same time, creditor obligations are broken down by the entities to which the enterprise owes money - suppliers, budget, buyers and so on. In the case of receivables, in addition to the breakdown by entities, there is also a division of reliability of debtors, including a so-called reserve of doubtful obligations that may not be met by their bearers. Only after the debt has spent a certain amount of time in such a reserve, it can be written off as hopeless.

As for emergency measures to regulate debts, they can be different: for debtors - lawsuits, attraction of collection agencies, imposing additional penalties on the debtor. In the case of creditor obligations, most often the main measure of regulation will be the attraction of additional funds to cover the debt, or the negotiation of a review of the payment terms.

Unfortunately, it is the idea that accounts receivable and accounts payable - a normal phenomenon, leads to excessive carelessness of the company's financial managers. We hasten to warn readers of an excessively calm attitude to this kind of obligations - many cases are known when they accumulated to huge sizes and caused huge problems until the complete collapse of the enterprise.