Costs associated with Accounts receivables

sunandaC

New member
WHAT ARE THE VARIOUS COSTS ASSOCIATED WITH ACCOUNT RECEIVABLE ?

 Capital cost; AR blocks the firm’s resources because of the time lag in sale of goods and collection from the customers. The firms has to incur additional funds, which involves cost.

 Administrative cost : The firm has to incur additional cost for maintaining AR. Ex :salaries to the staff,cost of conducting investigations and cost of credit worthiness.

 Collection cost: Cost incurred for collection dues from the customers. Ex :monitoring state of AR,letters,telephone and legal action.

 Defaulting cost: Inspite of all serious efforts some customers may not pay their dues. Hence it is written off.
 

rosemarry2

MP Guru
WHAT ARE THE VARIOUS COSTS ASSOCIATED WITH ACCOUNT RECEIVABLE ?

 Capital cost; AR blocks the firm’s resources because of the time lag in sale of goods and collection from the customers. The firms has to incur additional funds, which involves cost.

 Administrative cost : The firm has to incur additional cost for maintaining AR. Ex :salaries to the staff,cost of conducting investigations and cost of credit worthiness.

 Collection cost: Cost incurred for collection dues from the customers. Ex :monitoring state of AR,letters,telephone and legal action.

 Defaulting cost: Inspite of all serious efforts some customers may not pay their dues. Hence it is written off.

Hey buddy,

Here I am uploading Theory and Evidence of Accounts Receivable Management Policy, so please download and check it.
 

Attachments

  • Theory and Evidence of Accounts Receivable Management Policy.pdf
    3 MB · Views: 0
Top