Importance of Trade Receivables Analysis
Trade receivables, aka accounts receivable, represent the amount a company has billed customers for goods or services delivered but has yet to receive.
Here’s why trade receivable analysis is important:
- They help in managing cash flow.
- Revealing customers who are at the risk of default.
- It uses key indicators like Days Sales Outstanding (DSO), which highlights efficiency in collecting payments.
Trade receivables remind us to keep an eye on borrowed books. You know you have to return them on time.
