Question

Financial statements provide information about the financial position, performance and changes in the financial position of the organization. As a healthcare manager, would accounts receivable affect the bottom line and how would you prevent loss of income?

Answer 1

The accounts receivable is the amount receivable from customers for sales that have been effected in credit. Thus, accounts receivable is nothing but the revenue that is yet to be received thus, due from customers. Hence, accounts receivable obviously affects the bottom line. In case there is any uncertainty that arise in the future in relation to the final receipt of accounts receivable then necessary provisions have to be made in the profit and loss account for expected loss in revenue to the future. Resultantly the profit and loss of the organization would be effected thus, the bottom line would be affected by the accounts receivable.

The loss of income can be prevented by regularly updating the accounts receivable and querying the customers from whom the amounts are due. Periodical intimations shall be sent to the customers to ensure there is no loss the revenue from them due to loss of contact. Also the management mist ensure that there is a proper system in place to ensure there is no fraud in respect of accounts receivable.