cashreceivable

Cash receivable refers to money owed to a business by its customers for goods or services that have already been delivered or rendered. It is a form of short-term asset that represents a future inflow of cash. When a sale is made on credit, the amount due from the customer is recorded as a receivable. These receivables are typically expected to be collected within a short period, usually less than a year.

Businesses track their cash receivables diligently as they are a significant component of their working capital. Proper management of receivables is crucial for maintaining healthy cash flow and ensuring the financial stability of the company. This involves establishing clear credit policies, invoicing customers promptly and accurately, and implementing effective collection procedures.

The total amount of cash receivable is often presented on a company's balance sheet as an asset. It is usually categorized as accounts receivable, which is the most common type. Other forms of receivables can include notes receivable, which are formal written promises to pay a specific sum of money on a certain date, or trade receivables, which specifically arise from the normal course of business operations.

Uncollected receivables can pose a risk to a business, as they represent funds that are not immediately available for use. Businesses may set aside an allowance for doubtful accounts to account for the possibility that some receivables may not be collected. This allowance reduces the net value of receivables shown on the balance sheet.