Net Receivables

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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.

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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 ... Read Full Answer >>
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