Cash vs accounts receivable

The obvious advantage of cash over accounts receivable is that cash is a liquid asset that can be used right away. The decision to accept payments later can be an economic strategy to increase sales for some companies. Either decision should be based on the companies goals and best practice. A cash based operating model allows the company to know how much cash they have available at all times but it does not allow for a good tracking of sales and purchases. If a company decides to record an accounts receivable it's building loyalty with their customers and at the same time performing the most important element, which is tracking uncollected profits.

Choose to implement a process that works for your company which includes industry accounting best practices. Developing detailed policies and procedures is a key tool and advantage for the accountant responsible as a guide of reference and it acts as a strategic link to managements vision on the future for the company.

Coming together is a beginning; keeping together is progress; working together is success." - Henry Ford