Accounts receivable

Underuse is generally understood a request, a command, a statement that the collectability of a right or the assertion of a claim.


Entrepreneurial term

Receivables as assets part of the assets of the balance sheet. The legislature has given the demands of such importance that he has assigned to them for the sake of clarity, balance a separate balance sheet item. They are reported as trade receivables, receivables from affiliated companies, receivables from companies with an investment ratio or other assets in the current assets of the financial statements in accordance with § 266 para 2 B II HGB. Receivable arise in particular by a delivery or service, in which the risk has passed to the customer and this has not paid immediately. Reason for the non-immediate payment may be an agreed-upon target sale, but also a late payment. These requirements are the most important or significant asset of the current assets in the balance sheet at most companies. A demand management is to ensure that the unpaid deliveries with respect to the creditworthiness of the customer and due date to be monitored. This collection risk is the risk that purchasers too late, do not pay or do not completely or even insolvent. It may be reduced or eliminated by the delivery under retention of title. This is an original collateral, which agreed with the customer and the supplier performs non-payment of debt means that the supplier may demand the goods supplied by the customer. Materialized the collection risk, the intact receivables turn into bad debts.

Legal meaning

In German law, the term "claim" a claim the law of obligations, the following BGB is regulated in § § 241. It is sometimes also the synonym ' debt ratio in the narrow sense "is used. For the requirement is specific in that it is based on an obligation ( in the broad sense ), see § 241 paragraph 1 sentence 1 BGB. This distinguishes them from other, so-called in rem claims, particularly those of property law. Claims are based on people relationships, in rem claims, however, are relevant.

So it is about in a claim of the owner to surrender his cause against the thief to a property law claim, which depends on the legal relationship of the owner to this matter. Demands, however, are, for example, the claim of the seller for payment of purchase price against the buyer of the contract of sale or the claim of the victim for payment of damages against the perpetrator, because they have a legal connection between the people involved, either of these wanted (contract) or as required by law ( may be legal obligation ).

Also public law relationships can be subject of a claim, such as tax debts, fines, recoveries of unjustified benefits.

Receivables in Accounting

The call is from a legal perspective, a payment or other claim against a claim debtor resulting from a concluded contract ( § 241 BGB). It occurs when a delivery or service is carried out to a customer and this is not paid immediately. Receivables are an asset in the balance sheet and included in current assets or current assets. Claims are claims of the company to payments, such as for the provision of goods and services. Among the claims in current assets include:

  • Trade accounts receivable,
  • Other financial assets,
  • Other non-financial assets.

Basics of accounting for receivables IAS 39 (Financial Instruments: Recognition and Measurement ), IAS 32 (Financial Instruments: Presentation ), IFRS 7 (Financial Instruments: Disclosures), and F49A, F53 - F59, F89 - 90

Differences to the statutory scheme at national level can be observed especially in the valuation of receivables. Under German GAAP, eliminating the IAS / IFRS known option, accounts receivable and loans at fair value to evaluate. Loans and receivables are accounted in accordance with HGB repayment amount.

Basic Definitions

One requirement is to obtain any contractual claim, cash or other financial assets. Receivables are financial assets and are among the financial instruments.

An asset is a resource that is due to events in the past at the disposal of the company, and which is expected to flow to the entity from which future economic benefits.

A financial instrument is any contract that one entity gives rise to a financial asset of the other and a financial liability or an equity instrument. Common examples of financial instruments include securities and receivables.

Fair value is the amount for which an asset between knowledgeable, willing and independent business partners exchanged or a liability can be settled. He is determined according to the following hierarchy:

An asset shall be classified as current when it satisfies any of the following criteria:

All other assets are classified as non-current.

Recognition and Categorization

Receivables from deliveries and services are to be capitalized according to the above definition only when the revenue has been recorded, that is, the product must be delivered or have been delivered to the customer the service. For deliveries a receivable is recognized only activate if the risk of loss has passed to the buyer.

The write-off of the balance sheet is, if the company loses the right to the benefits that are specified in the contract when the rights expire or if the Company loses control over the contractual rights of the financial instrument. By assigning all financial instruments in the following categories in the context of the transaction is determined how to set the affected financial assets in the balance sheet and are to be evaluated.

  • Held for trading assets
  • Held to maturity investments
  • Loans and receivables
  • Available-for- sale financial assets

Valuation principles

At initial recognition, a financial asset is measured at fair value (fair value) to evaluate the inclusion of transaction costs. Bonuses ( trade discounts ), rebates (cash discounts ) and specific allowances are deducted from the fair value. Adjustments are always capitalized discontinued. Subsequent measurement at amortized cost ( amortized costs ).

From materiality claims are not discounted if they are due within one year. For receivables that are not due within one year, the amortized cost are to be determined using the effective interest method, unless made ​​with the customer no separate agreement on the calculation of market interest rates. If a decision taken interest agreement under the market rate, it is to lay a basis for determining the discount amounts for the difference between the market and the interest rate agreed with the customer.

Under IFRS, receivables are to be assessed individually, the formation of general provisions to cover general credit risk is therefore inadmissible. May, however, so-called global individual allowances, with individual specific valuation allowances generally have priority. In accordance with IAS 39, AG 87 specific valuation allowances based on a grouping of the claims in accordance with the credit assessments by the respective debtors are carried out. Once specific information about an individual single impairment of a claim within a group formed of receivables exist, this requirement must be separated from the group and the corresponding reduction in value are reported as individual specific valuation allowance. An allowance for doubtful accounts is mandatory if the amount of the impairment loss can be determined with sufficient accuracy, and the event that caused the devaluation is likely to occur.

Individual allowances are to be made ( known or suspected credit risks on the part of the customer) because of disputed claims ( lack or alleged lack on the part of the supplier) and for doubtful accounts.

A receivable is derecognised from the balance sheet when the company loses the right to the benefits that are specified in the contract when the rights expire or if the Company loses control over the contractual rights of the financial instrument. Capital gains and losses in profit or loss to be set. The sales success is the difference between the proceeds and the carrying amount of the financial instrument.

Offsetting of assets and liabilities is not permitted even in identity of debtors and creditors, and approximately the same maturity.

Balance sheet and explanation

A complete financial statements include, among others, a balance sheet and a profit and loss account.

The balance sheet must include the following:

  • Financial assets
  • Trade receivables and other receivables
  • Tax refund claims
  • Deferred tax assets.

Short-term and long-term assets should be presented as separate classifications in its balance sheet when a liquidity presentation is not reliable and more relevant.

The disclosures required by IFRS 7 include at the level of individual classes of similar financial instruments, information about the significance of financial instruments and information on the nature and extent of risks associated with financial instruments.

Specifically, are indicated in the balance sheet and notes:

  • Financial assets and financial liabilities at fair value (fair value) through depreciation or write-up, each with initial and subsequent evaluation;
  • Held to maturity ( held-to -maturity ) systems;
  • Received and originated loans;
  • Held for sale ( held-for -sale ) financial instruments and

Reclassifications (IFRS 7.12) must be disclosed as well as write-offs (IFRS 7.13).

The following items are taken to the profit and loss account:

  • Calculated gains or losses on financial instruments,
  • Interest on financial instruments,
  • Fees and
  • Impairment of financial assets.