A bill receivable is a document and bill of exchange drawn by a vendor for the customers to receive future payments for providing goods or services on credit. Bills receivable ensure that a customer formally agrees to pay for credit purchase to the vendor till the maturity date. This bill of exchange is remitted to collect payment for credit sales and used to secure short-term funding.
It is often not easy for the vendors to manage the bills receivable. So, everyone should follow a proper cycle to manage the bills receivable, which involves the following steps:
First, create a bill receivable –
When your customer purchases goods or services on credit, create bills receivable to accept the payment in the future. You can create signed, unsigned, or customer-issued bills of exchange using the accounts receivable window.
Remitting the bills receivable –
You can use the remittances window to remit the bills receivable to a bank or a factoring company. In addition, you can keep printed statements receivable to maintain future records.
Managing bills receivable –
You can use the bills receivable portfolio management window to analyze the changes in the accounts receivable records. You can manage the bills receivable as per the requirement, such as recording the customer’s acceptance, endorsing a bill, marking a bill as paid unpaid, cancelling, or recalling an account, etc.
Review and share bill receivable reports with customers –
If customers’ acceptance is pending, or they have not made the payment till the maturity date for the credit purchases, you can send them a reminder. You should prepare a report of bills receivable, review it, and share it with your customer as a reminder.
So, this is how anyone can manage bills receivable to get the payment later for providing goods or services on credit to the customers.
Now, a question arises, are bills receivable or accounts receivable the same or different? Both accounts receivable and bills receivable are assets for the company, but both are different in many ways. So, bills receivable and accounts receivable both differ in the following ways:
- Bills receivable is the bill of exchange issued by an entity to its customers or debtors for future payments for credit purchases. Whereas accounts receivable refers to the due amount, your customers have not yet paid for past purchases.
- A bill receivable has been drawn by the vendor with a specified maturity date, but accounts receivable may have an indicative due date. So, the due date for accounts receivable can be extended.
- Bills receivable are created based on the underlying account balance. Whereas accounts receivable are made based on sales transactions, as evidenced by the invoice.
- All bills receivable are accounts receivable, but all accounts receivable cannot be represented as bills receivable.
- Bills receivable can be considered current or non-current assets based on maturity. But accounts receivable are only considered as current assets.
So, in this way, bills receivable are different from accounts receivable. You should know these significant points to understand the difference between the accounts and bills receivable.