What are the main risks associated with Accounts Receivable?

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accbyte
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Joined: Mon Jan 20, 2025 11:48 am

What are the main risks associated with Accounts Receivable?

Post by accbyte »

Late payments are one of the biggest hazards. Errors in transaction recording and customer default Cash flow is hampered by late payments. It has an impact on the business's capacity to pay its debts. Not making payments to clients that they are unable to pay This lowers profitability and generates bad debt. Inaccurate financial reporting can also result from mistakes in AR records. Customer relations suffer as a result, and compliance problems arise. Before granting credit, businesses run credit checks to lower these risks. Clearly define the terms of payment and aggressively chase unpaid invoices. To guard against possible losses, businesses occasionally employ strategies like factoring or credit insurance.
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