What is pure receivables?
Pure receivable is the total receivables of the company, fewer of them, any of the claims that are considered to be a bad debt. From this point of view, the net claim can be defined as the amount of current claims that the company expects to eventually be collected. In most cases, this type of accounting is presented as a percentage in the official documents of the company and press releases.
Identification of pure receivables is important for understanding the financial health of the company. Depending on the exact percentage, the claim may indicate that business is doing well, or that a certain question must be resolved before the stability of the company. A high claim, for example 95%, would suggest that society is in a healthy financial situation. On the other hand, if the current claim is below 80%, owners and officers would like to identify the reasons for relatively high amounts of poor debt and determine what can be done for the future of the ratio of receivables turnover.
businessesAll types and sizes try to generate the highest percentage of pure receivables. It is not uncommon for companies to set a goal to keep the percentage of poor debt to more than 2%. This would mean that the company has a net claim of 98%and is engaged in the task of collecting excellent invoices with great efficiency.
When the percentage of a pure viewing falls below what society considers to be a fair amount, steps are usually taken to determine what type of debt remains out, how long this debt has agreed and what can be done for the pension of these debt obligations. In some cases, this involves overturning customer accounts that are really past due to a collection agency. Because agencies of this type routinely maintain part of the funds that collect clients named this means that the original debt owner is likely to write down any difference between the amount received via a collection agency and possessionTatek appearing in account receivables. An alternative approach is to sell debt directly to another business for a small percentage of the total amount, write down the difference and completely erase this amount from the receivables.
Less than desirable net receivables can also cause changes in how the company expands the loan or in how specific customers are managed. Business can implement stricter loan qualifications, which makes it easier to screen potential clients who are less likely to keep their accounts up to date. For older customers who are delinquent, the company may require these clients to set old balances before accessing other goods or services. In some cases, the client can seriously be completely abandoned and must not be allowed to trade Supplier again.