Trade receivables are amounts customers owe for goods or services supplied in the ordinary course of business. They arise after invoicing or another contractual billing event and remain outstanding until payment, credit, write-off or other settlement.
How does Trade Receivables work in practice?
A trade receivable begins when a business supplies goods or services on credit and records the amount due from its customer. The balance is reduced by payments, credits, returns or write-offs. Finance and credit teams use the receivables ledger and aging report to track due dates, disputes, concentration and the amount that may still be collected.
What the file should show
Maintain customer, invoice, due date, currency, delivery evidence, disputes, credits, collections and aging for each balance.
What does Trade Receivables not establish?
Recorded revenue does not guarantee collectibility. Returns, set-off rights, concentration and late payment affect realizable value.
