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Accounts Receivables Cycle

Accounts Receivables Cycle

The Accounts Receivables Cycle arises when you allow a customer to take immediate possession of a product or receive a service in return for a promise to pay in the future. In other words, this means you allow them to take possession of your products before they pay you. If your business accepts credit cards, the credit card company manages the risk. But if customers are going to pay with cash or checks, you must manage verification of payments and risk. The cycle includes:

  • Customer making a purchase
  • Creating customer invoice
  • Print/send invoice
  • Apply discounts for early payments, or fees for late payments
  • Receive payment