Advanced English Dialogue for Business – Accounts receivable

Listen to a Business English Dialogue About Accounts receivable

Harper: Hi John, do you know what accounts receivable are in business?

John: Yes, I do. Accounts receivable are the amounts of money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Harper: That’s right. How do companies manage their accounts receivable?

John: Companies typically track their accounts receivable using accounting software, send invoices to customers for payment, and follow up on overdue payments to ensure timely collection.

Harper: What happens if customers don’t pay their accounts receivable on time?

John: If customers don’t pay their accounts receivable on time, companies may impose late fees, initiate collection efforts, or even write off the unpaid balances as bad debts.

Harper: Are there any risks associated with accounts receivable?

John: One risk is that accounts receivable represent money that the company is owed but hasn’t yet received, which can affect cash flow and liquidity if customers delay payment or default on their obligations.

Harper: I understand. How can companies mitigate the risks associated with accounts receivable?

John: Companies can mitigate risks by conducting credit checks on customers before extending credit, setting credit limits, offering discounts for early payment, and establishing clear payment terms and policies.

Harper: Thanks for explaining, John. Accounts receivable management seems like an important aspect of financial planning for businesses.

John: Absolutely, Harper. Effective accounts receivable management helps companies maintain healthy cash flow and minimize the impact of unpaid invoices on their operations.