Net Receivables

AAA

DEFINITION of 'Net Receivables'

The total money owed to a company by its customers, minus the money owed that will likely never be paid. Net receivables are often expressed as a percentage; the higher the percentage, the more money a company is able to collect from its customers and the better off the company is.

INVESTOPEDIA EXPLAINS 'Net Receivables'

If a company estimates that 2% of its sales are never going to be paid, net receivables equal 98% (100% - 2%) of the accounts receivable. Using these percentages, if the company's gross receivable accounts total $50,000, it can assume that its net receivables will be $49,000, and its bad debts will be $1,000.

RELATED TERMS
  1. Asset Sales

    A sale of bank receivables by a bank to another party. Asset ...
  2. Vendor Note

    A type of debt instrument used in a particular type of short-term ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  5. Overadvance

    A short-term commercial loan taken by a company in order to purchase ...
  6. Receivables Turnover Ratio

    An accounting measure used to quantify a firm's effectiveness ...
RELATED FAQS
  1. What happens if a company doesn't think it will collect on some of its receivables?

    The accounts receivable account, or receivables for short, is created when a company extends credit to a customer based on ...
Related Articles
  1. Entrepreneurship

    Small Business: Speed Up Receivables To Avoid A Cash Crunch

    Waiting for customers to pay can be a losing game. Look to factoring for quicker cash.
  2. Markets

    What Is A Cash Flow Statement?

    Learn how the CFS relates to the balance sheet and income statement as a part of a company's financial reports.
  3. Markets

    Introduction To Fundamental Analysis

    Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
  4. Investing

    What's a Debit Note?

    A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaser’s account. ...
  5. Investing

    What's Capitalization?

    Capitalization has different meanings depending on the context.
  6. Investing

    Deferred Tax Liability

    Deferred tax liability is a tax that has been assessed or is due for the current period, but has not yet been paid. The deferral arises because of timing differences between the accrual of the ...
  7. Fundamental Analysis

    The Best 5 Online Accounting Systems For Small Business

    Running a small business can be difficult, but thanks to these online accounting services, taking care of payroll doesn't have to be.
  8. Investing

    Understanding Cost Accounting

    Cost accounting is the method of financially allocating expenses to goods that are manufactured for resale. Cost accounting is also referred to as managerial accounting, because managers use ...
  9. Investing

    What are Prepaid Expenses?

    A prepaid expense is an asset on the balance sheet. Due to accounting principles, expenses are often accrued on the balance sheet and expensed in a later period.
  10. Investing

    What's a Sunk Cost?

    A sunk cost was incurred in the past, is independent of future events and cannot be recouped. Economists teach that sunk costs should not be considered when making a financial decision. Rather, ...

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center