Schedule of receivables: Overview, definition, and example
What is a schedule of receivables?
A schedule of receivables is a detailed listing or report that outlines all outstanding amounts owed to a business by its customers or clients. This schedule typically includes information such as the customer’s name, the invoice number, the amount owed, the due date, and the payment status (whether it’s overdue or paid). The purpose of the schedule is to track and manage accounts receivable effectively, ensuring the business can follow up on unpaid invoices and maintain healthy cash flow.
For example, if your small business sells products on credit to various customers, the schedule of receivables would show which customers have outstanding balances and when those balances are due to be paid.
Why is a schedule of receivables important?
A schedule of receivables is important because it helps a business manage its cash flow and ensure timely collections. By tracking the outstanding amounts owed to the business, it can identify overdue accounts and take action to follow up with customers or clients. It also serves as a key tool for financial reporting, helping businesses understand how much money they are likely to receive in the future and assess their financial health.
For SMBs, maintaining an accurate schedule of receivables is crucial for reducing the risk of bad debts and ensuring that the business can meet its financial obligations.
Understanding schedule of receivables through an example
Imagine your small business has provided services to several clients, and each has agreed to pay within 30 days. The schedule of receivables will include a list of all customers, the amount they owe, and the date the payment is due. For example, if one client owes $1,000 for services rendered and the payment is due in two weeks, the schedule will reflect that amount and the due date. If the payment isn’t received by the due date, the business will know to follow up with the customer.
In another example, if your business has multiple clients with outstanding invoices, the schedule of receivables will allow you to prioritize which clients to contact based on the due dates or the amounts owed.
An example of schedule of receivables in action
Here’s how a schedule of receivables might be referenced in a financial report or internal document:
“The company’s schedule of receivables, as of the end of the quarter, shows a total of $25,000 in outstanding invoices. Of this, $10,000 is due within 30 days, $8,000 is due in 60 days, and $7,000 is overdue by more than 90 days.”
Conclusion
A schedule of receivables is a key tool that helps businesses track amounts owed by customers and manage cash flow. For SMBs, keeping an updated schedule of receivables ensures that the business can follow up on overdue payments, reduce the risk of bad debts, and maintain financial stability. It provides clarity on the amounts expected and helps businesses stay on top of their financial obligations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.