Acaydia Aesthetics LLC Business Liquidity and Financial Health Discussion

I’m working on a business discussion question and need an explanation to help me understand better.

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The following are important factors when recording Receivables:

Credit sales

The primary factor in determining the volume of receivables is the level of credit sales. Increasing the credit sales will increase in the debtors and vice versa; therefore, credit sales are the factor of receivables.

Length of the credit period

The period allowed the customers to make payment

Cash discount

Customers should make immediate payments, and this discount is available only if the expense is less than the earnings.

Discount period

The amount of time you have to collect receivables is determined by the discount period you have.

Collecting credit information

Payment details should be appropriate, and consumer review should be thorough.

Credit analysis

Credit analysis gives information about the customer’s capacity and financial position.

Credit decision

After analyzing the credit report, a decision must be made. A journal entry should be recorded from the findings on the information. The entry should have the sale on the account; one must debit a receivable and

credit a revenue account. The customer must pay off their bills; one debits cash and credits the receivable.