THE ECONOMIC NATURE OF RECEIVABLES AS AN ASSET

Abstract

The article examines the economic nature of accounts receivable and describes the ownership rights to it in comparison with a tangible asset. It is found that the possession, use and alienation of receivables is extremely limited. In particular, ownership of receivables is in fact only the ownership of the right to probable repayment of such receivables. Therefore, ownership of receivables means ownership of all supporting documents that make a supplier's claim against a buyer legitimate. The use of such receivables is limited to actual collection of the receivables or their use as collateral, which is usually practiced at a significant discount. The alienation of receivables is limited by the contract with the buyer, and can be problematic due to the lack of an active market for liabilities. The authors prove that accounts receivable are a temporary value designed to support the sale of goods in the conditions of insufficient cash resources of the buyer, but at the same time accumulate the risks of solvency of such a buyer, which may result in late payments, partial or full non-payment for goods (works, services). Based on this, the authors identify six main factors that have a significant impact on the probability of receivables repayment. The study of such factors and assignment of numerical values to them will allow a more accurate assessment of the risk level of a particular debtor and avoidance of a non-payment crisis. The article describes the relationship between accounts receivable and the company's reputation. This will allow considering reputation as an object of management accounting. The authors prove that it is the buyer's reputation that is considered as a pledge for the goods received from the supplier. The supplier, selling the goods, believes that it is unprofitable for the buyer to lose reputation. However, there is a problem that before the transaction the supplier does not have access to information about the buyer's overdue payments with other suppliers. Therefore, the authors propose a mechanism for improving the tax invoice, which will allow receiving reports on the buyer's overdue obligations, which in turn will increase the parties' awareness before the contract.