Kubyshkina Alisa Nikolaevna, M.Sc. Ec.,

Petrova Yulia Andreevna, Ph.D.Phil.,

Rostov State University of Economics (RIPE),

Rostov-on-Don, Russia.

The influence of debt receivable and accounts payable for the enterprise’s financial stability

Annotation: The state of debt receivable of the enterprise plays an important role in management of financial and economic activities. Accounts payable – is an enterprise’s debt to other individual and legal persons. The business solvency of an enterprise is the key factor which shows us how much there is an effective management of debt receivable and accounts payable.

Keywords: debt receivable, accounts payable, enterprise, solvency, accounting.

In the current market economy, any enterprise for supporting its operability needs to take a firm position in the market. The best guarantee of the enterprise’s performance acts financial sustainability, which informs us, that revenues exceed expenditures at an enterprise which, in its turn, enables to fulfill the non-stop production process, realization of products, goods, works, services etc. E.L. Belova characterizes financial sustainability as a “condition of financial resources that supports the development of the enterprise on the basis of sales growth and owner’s equity on retention of solvency and credit worthiness by acceptable risk level” [3, p. 115].

In the course of economic activity all enterprises interact with different partners. It’s an individual and legal person which directly has an influence on financial position of the organization, because, on the one hand, they are customers and buyers of goods (works, services). On the other hand, they give a necessary goods and services for the normal functioning of our organization. Cooperating with some contractors, their circulating assets are formed at the enterprise where the receivable and payable accounts are the main elements which influence on the value of these assets.

Receivable accounts – a receivable of enterprise’s contractors who were supplied goods (works, services), also it’s a receivable of advance holders who were granted cash to report and another debts of other persons to the enterprise.

The state of debt receivable of the enterprise plays an important role in management of financial and economic activities. According to D.A. Stepanova, a “high debt receivable is a diversion of resources from economic circulation and it can lead to the necessity of attracting expensive banking credits and loans for supplying current industrial and economic activities of an enterprise in future” [5, p. 60].

We would like to emphasize the following factors, which have an influence on the debt receivable rate:

1) planning and analyzing credit policy of an enterprise;

2) the correct keeping of accounting at an enterprise;

3) terms of delivery and terms of payment of dispatched goods, work (services) done;

4) solvency of buyers and clients;

5) ethics of doing business (honesty and conscientiousness of contractors).

The instability of Russian economy slows down business development and it has a negative effect at the level of contractor’s reliability. Also this lead to the tendency of increasing of debt receivable at the enterprises, and, as result, it leads to the deterioration in the financial position of the Russian organizations. That is why the effective organization of accounting and permanent monitoring of debt receivable are the major conditions of forming company’s optimal financial policy. Such correct financial policy ensures the business solvency for organizations.

Accounts payable – is an enterprise’s debt to other individual and legal persons. On the one hand, payable accounts are like a source of company’s funds, and on the other hand, it’s a debt that mast be liquidated during a certain time.

An increase in the accounts payable has a negative impact to the enterprise’s business solvency, because a sudden increase of credits and loans indicates a lack of own funds, which increases the risk to the worsening of the solvency at the enterprise. Excessive and uncontrolled accounts payable may lead to the bankruptcy of the whole enterprise.

Speaking about decreasing of accounts payable, we should note that an amount of debt receivable and accounts payable are closely interrelated. According to T.V. Afanasieva and A.A. Polunin, “the process of decreasing of accounts payable is directly concerned with the repayment of debt receivable, as, first of all, the organization may seek funds, required for repayment of accounts payable from accounts with debtors” [2, p. 73].

The business solvency of an enterprise is the key factor which shows us how much there is an effective management of debt receivable and accounts payable. According to V.A. Alyabieva, in order to manage to debt receivable and accounts payable effectively, it’s necessary to seek for optimal proportion of financial resources by means of which the company has free cash maneuvering. So, such company is capable to provide a trouble-free production process and sales of goods using effective application of financial resources, as well, as an enterprise is capable to control costs for updating and expanding its business [1, p. 4].

An enterprise requires complete, timely and reliable information for effective management of their financial resources. Such information provides accounting, which helps the users to make equal management decisions for keeping enterprise’s business solvency. A competent system of an enterprise of accounting of debt receivable and accounts payable promotes acceleration of mutual payment. It is a positive trend for establishment mutually beneficial cooperation with contractors.

Prof., Bogatya I.N. and Prof., Hahonova N.N. accentuate in their investigations, the necessity of accounting of debt receivable and accounts payable. They point out that during the process of financial and economic activities, enterprises enter into different kinds of dealings and fulfil the duties of legislation. That’s why, it is so important to organize effective accounting of this transactions [4, p. 366].

Thus, the financial condition of an enterprise depends on the optimal correlation of their debt receivable and accounts payable, in many ways. The formation of circulating assets enable to realize a reproductive function of organization and it’s realized through financial leverage and own sources.

In conclusion, we should say that the influence of debt receivable and accounts payable on the financial condition of an enterprise is very high. It’s important to manage them on the basis of efficient reliable and complete information, which is formed from the accounting system.

REFERENCES

1. Alyabieva V.A., Factors and methods to improving business solvency of organization. Youth and Science: Collection of stuff of VI All-Russian scientific-technical conference for students, graduate students and young scientists, 2011, p. 4. URL: http://conf.sfu-kras.ru/sites/mn2010/section12.html (in Russian).

2. Afanasieva T.V., Polunin A.A., The management of receivable and payable accounts in order to strengthen the business solvency of organization. Michurinsk State Agrarian University’s Herald, 2014, no. 6. pp. 71-78 (in Russian).

3. Belova E.L., Popelyshko T.M., The management of company’s business solvency. Modern science: actual problems and solutions, 2015, no. 4, pp. 115-118 (in Russian).

4. Bogatya I.N., Hahonova N.N., The financial accounting. Rostov-on-Don, 2011, 592 p. (in Russian)

5. Stepanova D.A., The confrontation of receivable and payable accounts and their influence on financial condition of company. International scientific conference’s Herald “Marketing and Management: science, practice and philosophy”. Moscow, 2015, no. 7, pp. 59-60 (in Russian).