Accounts Receivable

Accounts receivable is an accounting term representing legally enforceable claims for payment that a business holds against buyers who purchased goods or services on credit. In Philippine real estate, accounts receivable begins at reservation and tracks all amounts owed by buyers throughout the payment schedule.

Key Components

• Reservation fee – The initial non-refundable payment that creates the first receivable entry
• Equity payments – Scheduled installments during the pre-selling or construction period
• Amortization – Monthly payments after turnover, typically via bank financing or in-house installment
• Penalties and interest – Additional charges for late or missed payments
• Advances – Lump-sum payments made ahead of schedule

How it Works

1. Reservation: When a buyer reserves a unit, the system creates a sale record and generates a payment schedule. The total contract price minus the reservation fee becomes the initial receivable balance.

2. Payment Posting: Each payment received (via bank, check, or online transfer) reduces the outstanding receivable. The accounting module records a debit to cash and a credit to accounts receivable through double-entry bookkeeping.

3. Aging Analysis: The system categorizes receivables by due date—current, 30 days, 60 days, 90 days, and beyond. This helps you identify delinquent accounts early.

4. Collection Follow-Up: Automated reminders notify buyers of upcoming and overdue payments. Agents can access the buyer's ledger to discuss payment concerns.

5. Write-Off or Restructuring: If a buyer defaults, you can restructure the payment terms or write off the receivable after exhausting collection efforts (subject to BIR documentation requirements).

Pros & Cons

Pros:

• Enables buyers to pay in installments, increasing sales volume
• Generates interest income on in-house financing
• Provides clear visibility into future cash inflows

Cons:

• Ties up capital until collected
• Requires active monitoring to minimize bad debts
• Delinquent accounts affect cash flow projections

Real-World Application

In iRealtee, accounts receivable tracking begins the moment a sale is validated through the Sales Wizard. The system automatically generates payment schedules based on the developer's terms—whether spot cash, deferred cash, or bank financing. You can view aging reports, send payment reminders, and reconcile collections against the general ledger. This integration ensures that your financial statements reflect accurate receivable balances without manual data entry.

Related Terms

• Payment Schedule – The breakdown of amounts and due dates for each buyer
• Accounts Payable – Money your business owes to suppliers and partners
• Cash Flow Statement – Financial report showing cash movements including collections

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References

• Accounts Receivable – Wikipedia
• RMC No. 65-2024 – BIR Clarification on Output VAT Credit for Uncollected Receivables
• BIR Memorandum Order No. 35-95 – Write-Off of Uncollectible Receivables