Accounts Receivable and Cash Flow
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Overview: Accounts receivable represent sales that have not yet been collected as cash. It explains that merchandise or services in exchange for a customer's promise to pay at a certain time in the future. If the business normally extends credit to its customers, then the payment of accounts receivable is likely to be the single most important source of cash inflows. In the worst case scenario, unpaid accounts receivable will leave the business without the necessary cash to pay its own bills. More commonly, late-paying or slow-paying customers will create cash shortages, leaving the business without the cash necessary to cover its own cash outflow obligations.
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Format: HTML | Date: Jan 2003 | Pages: 1
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