- May 10, 2026
- Posted by: АРОУ
- Category: Publications
Accounts receivable are one of the key indicators of a company’s financial condition. Effective management of receivables affects not only profitability but also the overall stability of the business. In this article, we will review the main types of receivables, their legal significance, and recommendations for managing them.
What Are Accounts Receivable?
Accounts receivable represent the amount owed to a company by other persons or entities (contractors, customers) for goods supplied, services rendered, or work performed.
Depending on the repayment period and the possibility of collection, receivables are divided into several categories.
Main Types of Accounts Receivable
Current Accounts Receivable
These are receivables that remain within the payment term established by the contract. In other words, the debt is not yet overdue, and the company expects payment in the ordinary course of business.
Example: a client must pay for goods within 30 days, and the payment deadline has not yet expired.
Legal aspect: there are currently no grounds for compulsory collection, but such receivables should still be monitored and properly recorded.
Overdue Accounts Receivable
These are receivables that were not repaid within the contractual payment period.
Example: the client was required to pay by 01.03.2025 but failed to fulfill the obligation.
Legal aspect: in the event of delay, the creditor has the right to demand repayment, send claims and pre-trial notices, and, if necessary, file a lawsuit.
Doubtful Accounts Receivable
These are receivables for which there are reasonable doubts regarding the debtor’s ability to repay.
Example: the contractor is experiencing financial difficulties, bankruptcy proceedings have been initiated, or there is evidence of insufficient assets.
Legal aspect: it is important to document the facts indicating doubtful collectability, as this affects accounting treatment and the possibility of future write-off.
Bad Debts
These are receivables that cannot be collected for objective reasons (for example, liquidation of the debtor, completion of bankruptcy proceedings, or expiration of the limitation period).
Example: the contractor has been liquidated, bankruptcy proceedings are complete, and no assets remain.
Legal aspect: such debts may only be written off if supported by proper documentation (extracts from official registers, bankruptcy court rulings, liquidation documents, etc.).
Why Is It Important to Distinguish Between Types of Receivables?
Proper accounting and classification help businesses:
- accurately assess company assets;
- make informed decisions regarding collection, restructuring, or write-off;
- prepare for tax and audit inspections;
- prevent financial risks and losses.
For litigation purposes, it is important to properly substantiate:
- the existence and amount of debt;
- the legal grounds for collection or write-off;
- compliance with limitation periods.
What Actions Should Be Taken?
- regularly analyze accounts receivable;
- promptly send claims and payment demands to debtors;
- conclude contracts with clear payment terms;
- prepare documents for write-off or litigation in cases of doubtful or bad debts;
- file lawsuits for compulsory debt recovery when necessary;
- initiate bankruptcy proceedings against debtors if appropriate.
How Can Our Lawyer Help?
Legal support regarding accounts receivable includes:
- analysis of contracts and obligations;
- preparation of legally sound claims and notices;
- negotiations with debtors;
- representation in court;
- support during debt recovery and bankruptcy procedures.
Proper control over accounts receivable is essential for the financial stability of any business. Timely legal assistance helps avoid losses and ensures effective protection of your rights.
If you have questions regarding debt recovery or receivables management, the Ukrainian Bar and Real Estate Association is ready to provide professional legal assistance and support.
