Why Account receivable collection on time is important

Account receivable, sometimes called as company A/R is a company money which are considered as asset. Since this is the money which is coming in the company its collection is importance for spending money in other things. Account receivable are created when a customer purchases goods and services but does not pay the bill of goods at the time of purchasing.

Business with account receivable generates invoices. Once the invoices generated your customer will pay within the limit. Invoice generation is a legal obligation which is required if the customer is denying to pay. Keeping track of account receivable is important because it indicate the income generation of your business.it gives you a clear idea on how much money your company gaining every month and what should be done to increase revenue.

Negligence in account receivable could have terrible consequences in future.it gives you support for documentation at the time of tax . Always remember the gross revenue importance is same as collecting account receivable on time. If collection is done on daily business it will enhance your productivity and streamline your cash flow.so maintain accurateaccount receivable

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