A business consultant is often tasked with analyzing a company’s financial performance and understanding how companies analyze their receivables in order to initiate performance improvement. Analyzing a company’s financial performance definitely includes performing accounts receivable analysis.

Accounts receivable, otherwise known as trade debtors or AR or A/R, is a type of working capital that refers to amounts from which entrepreneurs have yet to receive from their customers for goods sold. Receivables are a result of entrepreneurs extending credit to their customers. The amount of accounts receivable, which is an asset on a company’s financial report, depends on the number of customers the company has, the volume of the company’s sales and the amount of credit extended to its customers.

Collection of accounts receivable or debt collection is an important source of a company’s cash flow and business finance. As such, learning about accounts receivable analysis can prove vital for entrepreneurs.

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