Accounts Receivable refers to the money that an export enterprise should collect from overseas buyers for exporting goods or providing services, and it is a current asset. Usage scenarios: Under open account (O/A), documentary collection (D/P, D/A), or letter of credit (L/C), when the exporter has shipped goods but has not yet received payment, accounts receivable are formed. Precautions: Attention should be paid to aging, exchange rate fluctuations, buyer credit risk, and bad debt provisions; regular reconciliation should be carried out and export credit insurance should be taken out. Difference from other terms: Accounts receivable are different from advances from customers (advances are liabilities), and also different from notes receivable (which have documentary evidence). In trade finance, accounts receivable can be factored or pledged.
📝 Examples
1. As of the end of June, our company's accounts receivable from European customers amounted to USD 1.2 million, of which 30% was overdue for more than 90 days, and the finance department has made provisions for bad debts. (Illustrates accounts receivable balance and aging management)
2. To accelerate capital turnover, we signed an accounts receivable factoring agreement with the bank and sold USD 800,000 of accounts receivable to the bank without recourse. (Illustrates accounts receivable factoring financing)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
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