velkasaatavaan

Velkasaatava (Finnish for debt receivable, commonly translated as accounts receivable) is an asset on a company’s balance sheet that represents the right to collect cash from customers for goods delivered or services rendered. It arises when a sale is made on credit and the seller has fulfilled its performance obligation. Velkasaatavat are typically shown as current assets if collection is expected within twelve months; otherwise they are non-current.

Recognition and measurement: Velkasaatavat are generally recognized at the invoiced amount and, depending on the accounting framework, measured at amortized cost. In many jurisdictions, the asset is recorded at net realizable value, reflecting any expected discounts or returns. The balance is reduced as cash is collected and may be adjusted for impairment related to credit losses. Modern standards often require an impairment model based on expected credit losses (ECL), with provisions for receivables deemed unlikely to be collected.

Impairment and protection: If there is evidence of credit deterioration or specific default, a write-down or allowance is recorded. When a receivable is deemed unrecoverable, it is written off against the allowance or directly against profit, depending on the policy.

Realization and financing: Cash collections decrease the velkasaatava. Some receivables may be factored or sold to financial institutions, which transfers part of the credit risk and accelerates cash flow. Interest income on receivables is recognized only if the agreement specifies interest-bearing terms.

Overview: Velkasaatavat are central to liquidity management and working capital. They carry credit risk and may be affected by economic conditions, customer concentration, and currency variations in international sales. In Finnish accounting practice, velkasaatavat are governed by applicable accounting standards and laws.