Accounts receivable control

Definition

Accounts receivable control is the process of managing and monitoring outstanding customer invoices to ensure timely payment. It involves tracking, reporting, and analyzing receivables to maintain cash flow and minimize bad debt.

5 Must Know Facts For Your Next Test

1. Accounts receivable control helps in maintaining liquidity by ensuring timely collections.
2. Special journals like sales journals are used to record credit sales transactions.
3. Effective accounts receivable control reduces the risk of bad debts and write-offs.
4. Aging schedules are tools used in accounts receivable control to categorize outstanding invoices by their due dates.
5. Stakeholders such as management and investors use accounts receivable data to assess the company's financial health.

Review Questions

• What is the primary purpose of accounts receivable control?
• How do special journals assist in managing accounts receivable?
• Why is it important for a company to monitor its aging schedule?

Related terms

Sales Journal:

A special journal used to record all credit sales transactions.

Aging Schedule:

A report that categorizes a company's accounts receivable according to how long invoices have been outstanding.

Bad Debt Expense:

An expense reported on the income statement representing amounts that are not expected to be collected from customers.