{"id":58206,"date":"2025-10-22T09:42:00","date_gmt":"2025-10-22T07:42:00","guid":{"rendered":"https:\/\/www.centralpay.com\/?p=58206"},"modified":"2026-02-26T12:52:17","modified_gmt":"2026-02-26T11:52:17","slug":"trade-receivable-definition-accounting-balance-sheet-and-recovery","status":"publish","type":"post","link":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/blog\/trade-receivable-definition-accounting-balance-sheet-and-recovery\/","title":{"rendered":"Trade receivables : definition, accounting balance sheet and recovery"},"content":{"rendered":"\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>Trade receivables : what is it ?<\/strong><\/h2>\n\n\n\n<p>A trade receivables is a sum of money owed to a company after the sale of a good or the provision of a service.<\/p>\n\n\n\n<p>In most sectors, especially <a href=\"https:\/\/centralpay.dev.innovest.fr\/en\/blog\/b2b-payment-terms-how-to-combine-compliance-and-performance\/\" data-type=\"post\" data-id=\"44070\">B2B<\/a>, payment is not immediate.<\/p>\n\n\n\n<p>The main stages of a trade receivable are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The provision of goods or services is carried out.<\/li>\n\n\n\n<li>The invoice is issued and sent to the customer.<\/li>\n\n\n\n<li>Payment has not yet been made.<\/li>\n<\/ul>\n\n\n\n<p>The trade receivable arises upon delivery of the goods or performance of the service and ends when the customer pays the amount due within the agreed period.<\/p>\n\n\n\n<p>This payment deadline, defined in advance between the two parties, governs the transaction. If it is exceeded, the debt becomes recoverable. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>The trades customer receivables<\/strong><\/h2>\n\n\n\n<p>It is essential to distinguish between the different types of trade receivables, as each of them has a specific impact on the company&#8217;s balance sheet.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Undue debt<\/h3>\n\n\n\n<p>The unpaid debt corresponds to an amount which is not yet due, because the payment period granted to the customer has not yet expired.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Due debt<\/h3>\n\n\n\n<p>The due debt becomes payable once the <a href=\"https:\/\/centralpay.dev.innovest.fr\/en\/blog\/invoice-due-date-definition-and-calculation\/\" data-type=\"post\" data-id=\"57414\">due date<\/a> has passed. The customer must then pay the amount due.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Unpaid debt<\/h3>\n\n\n\n<p>An unpaid debt is an invoice that has come due but has not been paid by the customer. It requires special monitoring to avoid any risk of financial loss. <\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Disputed debt<\/h3>\n\n\n\n<p>This type of dept arises when the customer disputes the invoice, believing that the service provided is incomplete or non-compliant.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Doubtful debt<\/h3>\n\n\n\n<p>The debt becomes doubtful when there is a risk that the customer will not pay, in whole or in part, the amount due.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Bad debts<\/h3>\n\n\n\n<p>When a company is certain that the amount cannot be recovered, the debt is said to be irrecoverable. In this case, the company can recover the VAT initially paid to the State on the unpaid invoice, in order to limit the financial impact of the loss. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Old debt<\/h3>\n\n\n\n<p>Old debts are those that have never been collected. The company has<g id=\"gid_0\"> five years to initiate recovery<\/g> actions for businesses and two years for individuals. After this period, recovery actions are no longer possible.  <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>Trade receivables and balance sheet<\/strong><\/h2>\n\n\n\n<p>Trade receivables must be included in the company&#8217;s balance sheet. Here&#8217;s the essential information to properly include them. <\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Trade receivables: asset or liability?<\/h3>\n\n\n\n<p>A trade receivable is part of the balance sheet <strong>assets<\/strong>. It is included in the current <strong>assets category<\/strong> because it represents an amount that the company must collect in the short term. <\/p>\n\n\n\n<p>When a service is invoiced and the debt is <strong>not yet due<\/strong>, the following entries must be made:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit to <strong>account 70<\/strong> \u201cSales of manufactured products, services, merchandise\u201d<\/li>\n\n\n\n<li>Debit from <strong>account 411<\/strong> \u201cCustomers\u201d<\/li>\n<\/ul>\n\n\n\n<p>These movements reflect the sale made and the amount owed by the customer, awaiting payment.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-left\">Paid, doubtful or disputed debts: case to follow!<\/h3>\n\n\n\n<p>Depending on the status of the debt, its accounting treatment changes in the balance sheet.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-left\"><strong>Due debt<\/strong><\/h4>\n\n\n\n<p>When the debt becomes<strong> due<\/strong> and the customer does not pay, it is necessary to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit <strong>account 411<\/strong> \u201cCustomers\u201d<\/li>\n\n\n\n<li>Debit <strong>account 416<\/strong> \u201cDoubtful or disputed customers\u201d<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-left\"><strong>Disputed or doubtful debt<\/strong><\/h4>\n\n\n\n<p>If there is any doubt about the customer&#8217;s payment, the debt must be <strong>provisioned<\/strong> :<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit to <strong>account 491<\/strong> \u201cProvisions for depreciation of customer accounts\u201d<\/li>\n\n\n\n<li>Debit from <strong>account 681<\/strong> \u201cAllocation to provisions\u201d<\/li>\n<\/ul>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-left\">Disputed or doubtful debt<\/h4>\n\n\n\n<p>If you doubt that the customer will pay his invoice, you must record it for depreciation of the receivable:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit<strong> account 491<\/strong> \u201cProvisions for depreciation of customer accounts\u201d,<\/li>\n\n\n\n<li>Debit <strong>account 681<\/strong> \u201cProvisions\u201d.<\/li>\n<\/ul>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-left\">Debt paid<\/h4>\n\n\n\n<p>If the customer finally settles his debt, the <strong>provision<\/strong> must be taken back and the payment recorded:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit to <strong>account 416<\/strong> \u201cDoubtful or disputed customers\u201d<\/li>\n\n\n\n<li>Credit to <strong>account 781<\/strong> \u201cReversals of provisions\u201d<\/li>\n\n\n\n<li>Debit from <strong>account 512<\/strong> \u201cBank\u201d<\/li>\n\n\n\n<li>Debit of <strong>account 491<\/strong> \u201cProvisions for depreciation of customer accounts\u201d<\/li>\n<\/ul>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-left\">Bad debts<\/h4>\n\n\n\n<p>In the event of a definitive loss, the debt is considered <strong>irrecoverable<\/strong>. The entries to be made are: <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit to <strong>account 416<\/strong> \u201cDoubtful or disputed customers\u201d<\/li>\n\n\n\n<li>Debit of <strong>account 654<\/strong> \u201cLosses on bad debts\u201d<\/li>\n<\/ul>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>Calculation of WCR: working capital requirement<\/strong><\/h2>\n\n\n\n<p class=\"has-text-align-left\">Working capital requirements are essential for every business. They help to reflect a company&#8217;s financial health. Working capital is the difference between a company&#8217;s receivables and its payments.  <br><br><strong>Calculation of WCR: stocks + trade receivables &#8211; supplier payables.<\/strong><\/p>\n\n\n\n<p>An increase in customer receivables increases the need for working capital and thus weakens a company&#8217;s cash flow.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>Calculation of outstanding customer accounts<\/strong><\/h2>\n\n\n\n<p>Outstanding receivables represent all outstanding receivables that have not yet been settled within the payment period.<br><br>Outstanding receivables are calculated as follows:<\/p>\n\n\n\n<p><strong>Outstanding customer debts = invoices not due + invoices due + invoices to be issued<\/strong><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>Calculation of the Day Sales Outstanding (DSO)<\/strong><\/h2>\n\n\n\n<p>DSO (Day Sales Outstanding) is a company&#8217;s average payment or collection time. A low DSO indicates good financial health for a company. <\/p>\n\n\n\n<p>Calculation of DSO :<\/p>\n\n\n\n<p><strong>(Accounts receivable \/ turnover for the period) x the number of days in the period<\/strong><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\"><strong>How to manage customer debt collection?<\/strong><\/h2>\n\n\n\n<p><strong>Trade receivable<\/strong>s have a direct impact on your company&#8217;s <strong>financial health<\/strong>. Poor collection management can weaken your cash flow and threaten your business.<\/p>\n\n\n\n<p>Before initiating legal proceedings, which are often long and costly, opt for <a href=\"https:\/\/centralpay.dev.innovest.fr\/en\/blog\/which-debt-collection-solution-should-you-choose\/\" data-type=\"post\" data-id=\"43051\">amicable recovery<\/a>. This approach involves following up with the customer by phone, email or mail to obtain payment without dispute.<\/p>\n\n\n\n<p>When managed internally, this process can mobilize your teams and become time-consuming.<\/p>\n\n\n\n<p>That&#8217;s why <strong>CentralPay<\/strong> offers an <strong>automated collection solution<\/strong>. It simplifies payment tracking, sends automatic reminders, and secures your collections. <\/p>\n\n\n\n<p><strong>Result : time saved for your teams and healthier cash flow.<\/strong><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline is-style-outline--1\"><a class=\"wp-block-button__link wp-element-button\">Discover the CentralPay invoice recovery solution \u279c<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"BlogPosting\",\n  \"name\": \"Trade receivables: accounting balance sheet and recovery\",\n  \"headline\": \"Trade receivable : definition, accounting balance sheet and recovery\",\n  \"datePublished\": \"October 22, 2025\",\n  \"dateModified\": \"October 22, 2025\",\n  \"description\": \"Learn what trade receivables are, how they appear on your balance sheet and smart recovery strategies to improve cash flow.\",\n  \"image\": {\n  \"@type\": \"ImageObject\",\n  \"height\": \"600\",\n  \"width\": \"1000\",\n  \"url\": \"https:\/\/centralpay.dev.innovest.fr\/wp-content\/uploads\/2025\/10\/creance-client-definition-bilan-comptable-recouvrement.jpg\"\n  },\n  \"author\": {\n  \"@type\": \"Person\",\n  \"name\": \"CentralPay\"\n  },\n  \"publisher\": {\n  \"@type\": \"Organization\",\n  \"name\": \"CentralPay\",\n  \"logo\": {\n  \"@type\": \"imageObject\",\n  \"url\": \"https:\/\/centralpay.dev.innovest.fr\/assets\/images\/logo.png\"\n  }\n  },\n  \"mainEntityOfPage\": true,\n  \"url\": \"https:\/\/centralpay.dev.innovest.fr\/en\/blog\/trade-receivable-definition-accounting-balance-sheet-and-recovery\/\"\n}\n<\/script>\n","protected":false},"excerpt":{"rendered":"<p>Trade receivable represents the amount owed to your company by a customer after a sale or service. These amounts are essential to the smooth running of your business, as they directly impact your cash flow. <\/p>\n<p>In particular, they allow the calculation of working capital requirements (WCR), a key indicator of the company&#8217;s financial health.<\/p>\n<p>How to define a trade receivable? How to calculate working capital? What are the best methods for ensuring invoice collection?  <\/p>\n","protected":false},"author":4,"featured_media":58195,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[157],"tags":[212],"class_list":["post-58206","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-services-en","tag-trade-receivable"],"acf":[],"_links":{"self":[{"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/posts\/58206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/comments?post=58206"}],"version-history":[{"count":3,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/posts\/58206\/revisions"}],"predecessor-version":[{"id":61811,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/posts\/58206\/revisions\/61811"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/media\/58195"}],"wp:attachment":[{"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/media?parent=58206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/categories?post=58206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/centralpay.dev.innovest.fr\/fr\/en\/wp-json\/wp\/v2\/tags?post=58206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}