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Understanding the concept of ‘Accounts Receivable – AR’

In simple terms, it is part of the accounting system that records any products or services that has been delivered or used by the customers (individuals or corporations) but not yet paid to the company.

Depending on the company’s practice which is also based on the industry standards, Companies can deem the receivables as lines of credit or one-time payment from their customers.

Account receivables are part of the sales ledger which is normally records by the account department that includes the sales which the company has made, the amount of money received for goods or services and the amount of money which is owed by the customers.

As long as the payment for the good and services is not paid or paid partially, it will be deeming as the term “Account receivable” to the company and “Account payable” to the customer.

Another good example is a when an employee is hired by the company to do a specific task of work as agreed in the contractual term mentioned in the employment contract.
The individual will perform his or her duties first and will be paid the “receivables” also known as paycheck or salary in common terms.

Companies will constantly monitor it’s account receivable and follow up with customers which has not paid the agreed amount if not it will go to bad debt and will be considered as Loss to the company’s balance sheet.

Thus, account receivable management is crucial factor and knowledge that companies will need to learn and adapt. In order to ensure a good cash flow and minimum bad debt to the company’s balance sheet.

Debt collection agency goes global

In this quarter of 2015 we have noticed that there are many companies going global. One popular industry is taking up pace and is going global and that is debt collection. Debt collection agencies are going global because of the need for reclaiming back money, or also known as debt recovery.

The world is going into a debt mode. You can see financial institutions cutting down the credit limit of credit cards. Banks are cutting down the amount of money to be loaned and companies are reducing the credit terms for services rendered. All this is because of cash flow with the current economy.

With the need of collecting money for sustainability, debt collection is a common trend. Internet has bridge companies across countries together and services can be rendered globally. Products can be shipped internationally and money can be wired into any bank in any part of the world in just seconds.

In Debt collection Singapore, we have see these debt companies being global debt collectors because of the grant issued by the Singapore Government known as Market Readiness Assistance. This grant also known as MRA actually helps companies in Singapore to expand overseas and giving it monetary support to companies who expands overseas.

With debt collection companies growing, they help improve company cash flow as they recover the debts. The only thing I see is there is no government body now that regulates this.

What are your views to debt collection agencies?