Borrowed funds include accounts payable. The concept and main types of accounts payable
Absolutely any association in the process of economic activity can play the role of a supplier (executor) or customer. When making settlements on his accounts, as a rule, both accounts payable and receivable are formed. In this article, it would be appropriate to consider the concept and types of accounts payable and receivable. In addition, it is important to study the current aspects regarding the first category.
Features of debts
For a full understanding of such a category as accounts payable, it is advisable to consider the relevant system as a whole (namely, the concept, features, types of receivables and payables of the enterprise).
Today, accounts receivable is defined as the debt of other associations, employees and citizens of this structure. In other words, this is the debt of buyers for the purchased product, services rendered or work performed; debts of persons of accountable value for the amounts of funds issued to them. It is important to know that individuals and organizations that owe a certain amount of money to this organization are called debtors.
Accounts receivable: classification
It should be emphasized that receivables are endowed with a fairly branched classification. So, in accordance with the content of obligations, it is customary to distinguish the following types of categories:
- Debt that is directly related to the sale of marketable products, works or services.
- Debt that is in no way related to the sale of marketable products, works or services.
When considering the types of receivables and payables, it should be noted that the duration criterion involves the division of receivables into long-term and short-term, which is often called current in modern literature. In accordance with such a factor as the timeliness of payment, the following types of debt are distinguished:
- Normal.
- Overdue (sometimes hopeless and doubtful).
The concept and types of accounts payable
Accounts payable as an independent category of legal significance is a special part of the general property complex of the structure, which is the subject of binding relations between the association and its creditors. It is important to note that the economic aspect, one way or another, consists of a part of the organization's property (we are talking mainly about cash) and inventory items. It must be remembered that the structure uses and owns all types of accounts payable that are relevant today, however, one way or another, it undertakes to pay or return the corresponding part of the property complex to creditors. The latter are vested with the right to demand the performance of the obligation presented.
Dual nature of accounts payable
From the materials of the previous chapter, we can conclude that the nature and types of accounts payable are determined by a dual legal nature. In other words, as part of the general property complex, the category belongs to the organization in accordance with the right of ownership in relation to things or funds received by the loan method. On the other hand, as an object of legal relations of an obligatory nature, the considered economic category is nothing but the organization's debts to creditors. It is important to note that the latter are the persons endowed with all the rights to collect or demand from this association the specified part of the common property complex.
In accordance with the simplified aspect, accounts payable - a type of obligation to creditors; what the organization owes to other individuals or legal entities. A full definition of the category under consideration implies the obligatory consideration of the features noted above. Thus, accounts payable is part of the general property complex of the organization, which is the subject of debt obligations of the debtor's association, which have arisen in accordance with various legal grounds, to direct creditors (authorized persons).
Accounting for accounts payable - a mandatory aspect
It is important to know that all currently existing types of accounts payable, one way or another, are subject to accounting and, of course, reflected in the balance sheet. They are reflected as debts of the association-balance holder.
When the creditor structure does not intend to take any actions related to the voluntary return of debts, the debtor has the opportunity to collect them by force. It is important to add that, depending on the type of accounts payable, both judicial and extrajudicial procedures take place today.
Debt obligations of various origins
It is interesting to know that the definition of accounts payable currently covers those debt obligations of the creditor association that are of various origins. Since the currently known types of accounts payable are bright sources of cash or other material resources at the disposal of the organization, they are present in the liabilities side of the balance sheet. It should be added that the accounting of the category analyzed in the article is carried out in accordance with each creditor separately. The indicators of a generalizing nature reflect the total amount of accounts payable. By the way, it is given only on condition of division into certain groups.
Temporary financial improvement
The concept and types of accounts payable, its features at the present stage of economic development suggest that the attraction of borrowed money or other material resources into the turnover of the structure is a phenomenon that in any case implies a temporary improvement in the overall financial condition of the organization. The main condition here is that the borrowed funds are not frozen for a long period in circulation - they are returned at the time determined in accordance with the official agreement.
You need to know that otherwise there is a threat of an overdue type of accounts payable of the enterprise. This alignment, as a rule, involves the payment of a certain amount of a fine, as well as a significant deterioration in the financial life of the structure. That is why, when managing, it is imperative to study the prescription, the composition of the occurrence of accounts payable, as well as the presence, causes and frequency of its formation.
free credit
All types of accounts payable of the organization, in accordance with their essence, act as a free loan and belong to the category of cash and other material resources attracted by the structure into economic circulation. It should be noted that, unlike liabilities of a sustainable nature, accounts payable are not a planned source of the formation of working capital. One way or another, it serves as a short-term liability of the enterprise.
It is interesting to note that part of the structure under consideration is determined by the regular nature, because it appears, as a rule, due to certain features of the calculations. However, most accounts payable arise as a result of a violation of the discipline of the settlement and payment type. So, it acts as a consequence of non-observance by the structure of the actual terms of payment for a commercial product and the submission of settlement documentation.
Short-term type of borrowings
The considered category characterizes the most short-term variety of borrowed funds used by the structure. It is necessary to know that these funds are formed at the expense of sources of internal significance. Their accrual in accordance with various types of accounts is carried out by the organization on a daily basis. The repayment of obligations under these accounts payable is made within a specific time frame, where the range, as a rule, does not exceed a monthly period. Since, after accrual, the funds included in accounts payable no longer belong to the organization’s property, but are only applied until the due date determined for the repayment of current obligations, in accordance with their economic content, they are one of the varieties of borrowed capital.
Classification of accounts payable
In this and subsequent chapters, it would be appropriate to consider the main types of accounts payable. Today it is customary to allocate debt for:
- Contractors and suppliers.
- Transfers of premiums in accordance with the structure's property insurance.
- Transfer of contributions in accordance with the personal insurance of employees.
- Bills payable.
- Founders in accordance with the payment of income and so on.
So, depending on the legal nature and legal regime, the category under consideration is reduced to three groups:
- Before social funds and the budget.
- To employees (for example, wage arrears).
- To contractors and partners.
According to the criterion associated with the fact of the payment, the debt is:
- Non-overdue (debts, the maturity of which did not come at the time of the formation of the balance sheet).
- Overdue (maturity dates have come).
What else?
You need to know that in the structure of accounts payable it is customary to single out the debt of the association:
- To contractors and suppliers.
- To employees and organizations.
- Before off-budget funds of the state character.
- Before the budget.
- According to received loans and credits.
- to other creditors.
Features of accounts payable
- It is a free source of applied borrowed funds. Being a free source of capital formation, accounts payable provides some reduction not only in its borrowed share, but also in the full cost of capital.
- The size, one way or another, affects the duration of the financial cycle of the structure. It has an impact to some extent on the required amount of cash in order to finance current assets. The larger the relative value of the category under consideration, the smaller the amount of funds the structure needs to attract for the current financing of its own economic activity.
- The total amount of debt directly depends on the volume of economic activity of the structure (primarily on the volume of output and sales of the product). It is important to note that with an increase in the volume of production and sale of marketable products, the expenses of the organization increase, which are accrued as part of the debt. Thus, the total amount of accounts payable increases, and vice versa.
It is important to emphasize that the value of the category under consideration is affected by the volume of all purchases, as well as the corresponding percentage of purchases under the terms of the subsequent payment. In addition, factors related to the execution of contracts with counterparties have a considerable influence; terms of settlements with contractors and suppliers; the level of saturation of the market with this product; policy related to the repayment of accounts payable; consistency in the application of the results of the analysis of the category under consideration, as well as its quality; settlement system adopted in the structure.
It is important to note that in the case of an increase in non-cash settlements, the quality and turnover of accounts payable increase proportionally. Its size is reduced, so the stability and solvency of the structure is significantly increased. In addition, accounts payable may be terminated by the executor of obligations, as well as written off as unclaimed.
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Introduction
financial loan account payable
The financial resources of enterprises are the basis of the financial system of the whole country. They occupy a separating position in this system, since they cover the most important part of all monetary relations in the country, namely, financial relations in the sphere of social monetary reproduction of the country. The financial policy is formed by the state, it also determines the procedure for the formation, distribution and use of funds from centralized funds of financial resources, which serve as one of the sources of financing for enterprises. With the help of financial resources, entrepreneurs reveal huge reserves in improving the financing and organization of their work, optimizing the capital structure, which ensure the growth of production volumes and the realization of profits, the balance of material and financial resources. The basic principle of enterprise finance is to equalize the opportunities for making a profit with overcoming the risk from advancing funds to various areas of business activity. In financing with borrowed funds, much attention is paid to stimulating commercial initiatives and increasing labor productivity.
Debt management is of great importance both for large companies, where working capital accounts for more than half of all its assets, and for small companies, where short-term liabilities are the main source of financing.
In this course work, the definition of borrowed funds is given, the policy of formation, the importance in the activities of the enterprise, financial management methods are revealed. Along with this, in the course work, the theoretical foundations for increasing the efficiency of the use of borrowed funds are used, an analysis is made according to the data of JSC "PLASTIC".
Each enterprise, starting its production and economic activity, must have a certain amount of money. With these financial resources, the enterprise purchases raw materials, materials, fuel on the market or from other enterprises under contracts, pays electricity bills, pays wages to its employees, incurs the costs of developing new products, all this is one of the most important parameters of management, which received the name "borrowed funds".
In the conditions of market relations, borrowed funds are of particular importance. For they are part of the productive capital which transfers its value entirely to the newly created product and returns to the entrepreneur in the form of money at the end of each cycle of capital. Thus, working capital is an important criterion in determining the profit of the enterprise.
Thus, borrowed funds can serve as an important tool for economic stimulation, control over the country's economy and management of financial resources. This explains my interest in this work. Its purpose is to analyze the financing of the enterprise as a whole, as well as the forms of financing, with an emphasis on borrowed funds.
1. The economic essence of borrowed funds of the organization
1.1 The concept and essence of borrowed funds
As you know, the formation of financial resources of the enterprise is carried out at the expense of own and borrowed funds. Own sources of financial resources at existing enterprises include profit (from the main and other activities), depreciation, proceeds from the sale of retired property. Along with them, the sources of financial resources are stable liabilities, which are equated to their own sources, since they are constantly in the turnover of the enterprise, are used to finance its economic activities, but do not belong to it. These include: the minimum carry-over debt on wages and deductions for social insurance, pension fund, health insurance, employment fund; minimum debt on reserves to cover future expenses and payments; debts to customers for advance payments and partial payment for products; arrears to the budget for certain types of taxes, etc. As the enterprise functions (growth of the production program, depreciation of fixed production assets, etc.), the need for funds increases, which requires appropriate financing of capital gains. therefore, with a lack of own funds, an enterprise can attract funds from other organizations, which are called borrowed capital.
Borrowed capital is a part of the capital used by an economic entity that does not belong to him, but is attracted on the basis of a bank, commercial loan or issuance loan on a repayment basis. The need to attract borrowed capital should be justified by a preliminary calculation of the need for working capital. The composition of borrowed funds includes a financial loan received from banking and non-banking financial and credit institutions, a commercial loan from suppliers, accounts payable of an enterprise, debt on the issue of debt securities, etc. In accounting, borrowed funds and accounts payable are reflected separately. Therefore, in a broad sense, it is possible to allocate borrowed funds and, in a narrow sense, the actual financial loan. The difference between borrowed funds in a broad and narrow sense is borrowed funds. On the one hand, raising borrowed funds is a factor in the successful operation of an enterprise, which helps to quickly overcome the shortage of financial resources, indicates the confidence of creditors and ensures an increase in the profitability of own funds. On the other hand, the enterprise is burdened with financial obligations. One of the main evaluation characteristics of the effectiveness of managerial financial decisions is the amount and efficiency of the use of borrowed funds.
1.2 Debt capital formation policy
Any enterprise must pay its bills so that there is still enough money left to improve the business. But the main goal of business is to increase the value of the enterprise, and hence to increase the wealth of the owners, by expanding the business. "Increasing the owner's wealth" sounds pretty simple. All that is needed is to sell good goods and services for more than their cost of production. However, before you start making any sales revenue, you will need money to "start" the business. But even getting your business back on track doesn't eliminate the need for outside funding: you may need extra cash to weather a downturn or upgrade your facilities and equipment.
Since you can't make money without money, companies are often faced with the need to take on additional debt. In the use of borrowed money for profit, the action of the mechanism of borrowing is manifested; the loan in this case is used as a "lever": it increases the potential of the borrower in the production of profit. If you combine your own funds (your capital) with borrowed money, you thereby increase the amount of capital that can be invested in the business. As long as your rate of return on borrowing exceeds the interest you pay on that loan, you are doing well. However, the mechanism of borrowing is a double-edged sword: it can increase your profits, but it can also cause losses.
Borrowing is complicated by the fact that it has many sources, and each of them has its own advantages and disadvantages, costs and benefits. The task of the financial manager is to find such a combination of funding sources that would have the lowest price. This process is dynamic, since changing economic conditions affect the cost of credit.
Borrowed capital used by the enterprise characterizes in aggregate the volume of its financial obligations (the total amount of debt). These financial obligations in modern economic practice are differentiated as follows (table 1. Forms of financial obligations of an enterprise reflected in its balance sheet.)
Table 1.
Borrowed capital of the enterprise (financial liabilities) |
||
Short-term borrowed capital (short-term financial liabilities) |
Long-term borrowed capital (long-term financial liabilities) |
|
short-term bank loans, the repayment period of which has not yet come |
Long-term bank loans, the repayment period of which has not yet come |
|
short-term borrowings that have not yet matured |
||
Short-term loans and loans not repaid on time |
Long-term borrowings that are not yet due |
|
Settlements with creditors (accounts payable) |
Long-term loans and loans not repaid on time |
2. Methods of managing borrowed funds
2.1 Sources and forms of external financing
The division of sources of working capital into own and borrowed is carried out on the following conditions. Due to internal sources, the main need of the enterprise for resources is covered, ensuring the continuity of production and the sale of products and services. Due to external sources, an additional need for the formation of seasonal stocks of raw materials, materials, components, finished products, covering production costs is covered.
table 2
There are various sources of external financing for working capital. The most widespread are:
· Russian banks - short-term credit, factoring, operations with bills of exchange;
Leasing companies - rent of property;
· investment funds - operations with bills of exchange, factoring;
· enterprises - commodity credit, tolling, bill settlements, mutual settlements;
· the state - mutual offsets, deferment of tax payments.
Shareholders - payments on dividends.
Short-term loans are provided to enterprises on a paid basis. To do this, loan agreements are concluded with banks, which reflect the conditions for the intended use of credit resources, their security, urgency and payment.
Commercial banks provide short-term loans for a period of less than one year under:
on the security of property and valuables of the client;
under the guarantee or guarantee of a third-party legal entity or individual.
There are blank loans that are provided to first-class borrowers without a guarantee or guarantee.
As security for the repayment of a loan, banks accept the client's property owned by him, with the exception of property, the sale of which is prohibited.
When lending secured by property, not only its book value is taken into account, but also its market or liquid value, which takes into account the possibility of quick sale of goods, securities, currency, etc.
Short-term bank financing can be divided into overdraft funds and short-term bank loans.
Overdraft features:
the cost depends on the actual amount and term of the overdraft;
· Funding amounts may exceed existing collateral;
flexibility, ease of prolongation of the contract.
Characteristics of a short-term loan:
less flexible than an overdraft;
more expensive.
The cost of an overdraft depends on the amount of funds at the disposal of the borrower at any time, and the cost of a bank loan remains constant throughout the entire period of the loan agreement. Therefore, an overdraft is economically advantageous compared to a short-term loan, but it is available only to a limited circle of highly reliable and stable enterprises.
To obtain short-term loans, the borrower provides the bank with the following documents characterizing its solvency:
· financial statements (balance sheet, income statement), on the basis of which indicators of profitability, liquidity, turnover and other financial ratios are determined.
· a feasibility study or business plan that would reveal the essence of economic activity and confirm the efficiency of resource use.
· a marketing plan, which assesses the level of risk in terms of the feasibility of the enterprise credited event or project as a whole.
Trade credit
This credit is provided in the form of goods by suppliers in the form of deferred payment for goods sold in the ordinary course of business. This form of credit is one of the most common in Russia.
Trade credit appears to be free at first glance, but it contains the supplier's costs associated with investing in receivables. The supplier, as a rule, includes these costs in the price, which depends on market conditions and mutual agreements of the parties.
In cases of payment for goods after the fact or in advance, as a rule, the supplier provides significant discounts, therefore, before accepting a trade credit, it is necessary to determine the size of this discount and compare this financing option with other forms.
Tolling
Tolling - work on "tolling raw materials". This is a way for the processor to receive raw materials at no cost to the processor, and then return the final product to the supplier.
The supplier rewards the processor for the work. The reward may be in the form of cash or in the form of finished products.
An enterprise - processor can resort to tolling if it currently does not have other means for financing 24b8 and ways to purchase raw materials and wants to continue production activities, as well as load production capacity, making non-tolling operations more profitable.
Bills
Promissory note - a written promissory note of the form established by law, issued by the borrower (drawer) to the creditor (promissory note holder), giving the latter the right to require the borrower to pay the amount specified in the bill by a certain date.
Traditionally, bills of exchange are issued to formalize a trade credit and are used as a cash equivalent for current settlements in case of a shortage of "live" funds.
In addition to issuing its own bills, an enterprise can use bank bills for settlements with suppliers. An enterprise, carrying out operations with bank bills, can receive the following benefits:
· An enterprise that has received a loan in the form of a bank bill can remove the problem of solvency, because the bill of a stable bank is more liquid than the bill of the enterprise itself;
· bank bills contribute not only to solving the problems of non-payment of the enterprise, but also to increase working capital.
The investor's benefit from the purchase of promissory notes consists of:
· Savings on tax payments: tax on income received on a bill of exchange is 15%;
· liquidity of investments, due to the urgency of the bill, as well as the presence of the bill market, where the sale of bills or their accounting in the bank is possible;
the ability to pay their own obligations;
Possibility to mortgage them and get a loan.
Factoring
The sale of a company's receivables to a financial institution, known as a factoring company. The transaction of selling receivables at a reduced price to a specialized company - a factor - or a financial institution in order to receive funds.
When selling goods on credit, the seller can receive immediate payment from the factoring bank with a discount of 15-50%, depending on the creditworthiness of the buyer and the quality of the goods.
The main advantage of factoring is to ensure the turnover and liquidity of funds.
Mutual settlements
Mutual settlements - monetary obligations between enterprises, repaid by the supply of goods or services with the participation of two or more parties.
Despite the fact that mutual settlements are not monetary transactions, any acceptance of goods from one party to another is tantamount to a short-term loan.
Barter
As well as mutual settlements, barter implies the repayment of monetary obligations between enterprises by the supply or exchange of goods. In Russia, barter transactions are one of the main sources of financing. The volume of barter transactions in Russia accounts for more than half of sales among the largest enterprises in the country.
Short term leasing
Short-term leases can reduce investment by investing in equipment that a business needs for a limited time.
Optimal financing of working capital depends on the quality of management, which should ensure the availability of the necessary amount of working capital. The necessary amount of working capital is understood as their size, which would be minimal, but quite sufficient to ensure normal economic activity in a particular period of time.
2.2 Accounts payable management
In order to effectively manage the company's debts, it is necessary, first of all, to determine their optimal structure for a particular enterprise and in a particular situation: draw up a budget for accounts payable, develop a system of indicators (coefficients) characterizing both a quantitative and a qualitative assessment of the state and development relations with the company's creditors and take certain values of such indicators as planned. The second step in the process of optimizing accounts payable should be an analysis of the compliance of actual indicators with their framework level, as well as an analysis of the reasons for the deviations that have arisen. At the third stage, depending on the discrepancies identified and the reasons for their occurrence, a set of practical measures should be developed and implemented to bring the debt structure in line with the planned (optimal) parameters.
In order for relations with creditors to be as consistent as possible with the goals of ensuring the financial stability (security) of the company and increasing its profitability and competitiveness, the company's management needs to develop a clear strategic line regarding the nature of attracting and using borrowed capital.
The first fundamental question that arises in connection with this for the company's management is: to conduct business at the expense of its own or borrowed funds? The second "dilemma" is the quantitative ratio of own and borrowed capital. Answers to these questions depend on many factors, both external (industry specifics, macroeconomic indicators, the state of the competitive environment, etc.) and internal (corporate) order (capacity of the founders, creditworthiness, asset turnover, profitability level, shortage of funds, short-term goals and objectives, long-term plans of the company and much more).
It is generally accepted that an enterprise that uses only its own capital in the course of its economic activity has maximum stability. However, this assumption is fundamentally wrong. From the point of view of competition in the market, it does not matter what capital a business operates with: its own or borrowed. The only difference may lie in the differences in the value of these two categories of capital. Lenders (be it banks or suppliers of goods and services) are ready to lend to someone's business only in exchange for a certain (sometimes quite high) income (interest). At the same time, even equity capital is not "free", since investments are made in the hope of making a profit higher than that which banks pay on deposit accounts. From the point of view of the company's strategic development, the starting point should be: the size and dynamics of business profitability, which directly depend on the size of the market share, pricing policy and the size of production (circulation) costs. The question of the sources of business financing is, in relation to the goals of achieving the competitiveness of the enterprise, secondary.
In order to optimize accounts payable, it is necessary to determine its "planned" characteristics. The most commonly used ratio associated with the assessment of accounts payable of an enterprise is the liquidity ratio, which is calculated as the ratio of working capital to short-term debt obligations.
Managers and financiers also often use the so-called "acid test" ratio, which is the ratio of the difference between current assets and the value of inventories to current liabilities. Both the first and second indicators should characterize the ability of the enterprise to cover its obligations to creditors. These coefficients have two significant drawbacks:
1. They operate with such concepts as "short-term" or "current" obligations, the term of which can vary from one day to one year. Therefore, the ratio of the terms of payments in the composition of both accounts payable and receivable is not taken into account in more detail;
2. The calculation is made, as a rule, on the date of the balance sheet, or some other fixed moment, which cannot fully speak of the actual state of the company's liquidity. This is due to the influence of many different (including random) circumstances at some particular moment (for example, on the balance sheet date, the company received a "grant" or "subsidy", which does not lead to an increase in accounts payable, and returned them the next day ).
Eliminate such "shortcomings" in the system of analysis of the state of the enterprise allow:
In the first case, for example, carrying out calculations using more discrete values (distribution of debts over monthly periods or (if necessary) weekly periods).
In the second case - to determine the average monthly or average annual value of the liquidity ratio and other similar indicators.
One of the most optimal framework indicators of a company's healthy state can be called a situation where accounts payable does not exceed accounts receivable. At the same time, as we have already noted, this "non-exceedance" should be achieved in relation to the most discrete range of values (terms) possible: annual accounts payable should not exceed annual receivables, monthly and 5-day accounts payable should not exceed monthly and 5 ti daily accounts receivable, respectively, etc.
When this "temporary balance" of receivables and payables is achieved, it is also necessary to achieve a "balance of their value": that is, in this situation, interest and other expenses associated with servicing accounts payable (at least) should not exceed income caused by benefits that associated with the very fact of postponing own receivables (in this case, the "normal" markup is not taken into account).
In order to determine the degree of dependence of the company on accounts payable, it is necessary to calculate several of the following indicators.
The ratio of the company's dependence on accounts payable. It is calculated as the ratio of the amount of borrowed funds to the total assets of the enterprise. This ratio gives an idea of how much the company's assets are formed at the expense of creditors.
Enterprise self-financing ratio. It is calculated as the ratio of own capital (part of the authorized capital) to attracted capital. This indicator allows you to track not only the percentage of equity, but also the ability to manage the entire company.
Debt balance. It is defined as the ratio of the amount of accounts payable to the amount of accounts receivable. This balance should be drawn up taking into account the terms of these two types of debts. At the same time, the desired level of correlation largely depends on the strategy adopted by the enterprise (aggressive, conservative or moderate).
The economic indicators described above give, basically, a quantitative assessment of accounts payable. For a more complete analysis of the composition of accounts payable, it is necessary to give a qualitative description of these liabilities.
Time factor. It is defined as the ratio of the weighted average of the maturity of accounts payable to the weighted average of the maturity of receivables. At the same time, the average repayment period of accounts payable must be kept at a level not lower than those average terms that the company's debtors must comply with.
Profitability ratio of accounts payable. It is defined as the ratio of the amount of profit to the amount of accounts payable, which are reflected in the balance sheet. This indicator characterizes the effectiveness of attracted funds and it is especially advisable to analyze it by periods. At the same time, the dependence of the dynamics of changes in this coefficient on those main factors that influenced its growth or decrease (changes in the repayment terms, the structure of creditors, the average size and cost of accounts payable, etc.) should be determined.
2.3 Financial methods of managing borrowed funds
2.3.1 Accounting for borrowings
When receiving a loan (credit), the borrower organization records the debt on the loan (credit) at the time of the actual transfer of money (other things) based on the amount actually received or in the valuation of other things provided for by the agreement (PBU 15/01).
Indebtedness on received loans and credits is divided into short-term (the repayment term of which, according to the terms of the agreement, does not exceed 12 months) and long-term (the repayment term of which, according to the terms of the agreement, exceeds 12 months).
Upon receipt of borrowed funds, the following entry is made in accounting: Dt. 51 - Ct.66 (67) - for the actually received amount of the loan (credit).
The return of the received loan (credit) is reflected in the posting: Dt. 66(67) - Kt.51.
When keeping records of borrowed funds, the organization - the borrower must ensure separate accounting for urgent and overdue debts.
Term debt is understood as debt on loans (credits) received, the maturity of which, under the terms of the contract, has not come or has been extended in the prescribed manner.
Overdue debt is considered to be the debt on received loans (credits) with expired maturity according to the terms of the agreement.
Organization - the borrower is obliged to make the transfer of urgent debt into overdue on the day following the day when, under the terms of the loan (credit) agreement, the borrower was supposed to repay the principal amount of the debt.
2.3.1.1 Accounting for borrowing and borrowing costs
The procedure for accounting for expenses on loans and credits depends on the purposes for which the organization - the borrower uses the borrowed funds. The costs include:
Interest payable on received loans (credits);
Exchange rate and amount differences related to interest payable on loans and credits received and expressed in foreign currency or conditional monetary units, formed from the moment interest is accrued under the terms of the agreement until their actual repayment (transfer);
Additional costs incurred in connection with obtaining loans and credits.
1. If the received borrowed funds are used for advance payment for inventories, works, services or for the issuance of advances and deposits on account of their payment, then the costs of these loans and credits are attributed to an increase in receivables arising in connection with the advance payment and (or ) issuance of advances and deposits for the above purposes. After the borrower organization receives inventories, performs work and renders services, further accrual of interest and other expenses related to servicing loans (credits) is reflected in the accounting records as part of the operating expenses of the borrowing organization.
The organization took a loan from a bank in the amount of 120,000 rubles for a period of 2 months with interest at a rate of 30% per annum. The loan amount was credited to the current account on January 15. The organization repaid the loan along with interest for the entire period of use of borrowed funds on March 15.
The borrowed funds were used by the organization to pre-pay for materials. Payment was made on January 16, and the materials themselves were received from the supplier on January 26.
The following entries will appear in the accounting of the organization:
Dt. 51-CT. 66 - 120.000 rubles - received a loan
Dt.60 - Kt.51 - 120.000 rubles - an advance payment for materials was made (including VAT - 20.000 rubles)
Dt.60 - Kt.66 - 1.085 rubles - interest on the loan agreement for the period from January 16 to January 26 is attributed to an increase in receivables (120.000 * 0.3 / 365 * 11 = 1085)
Dt. 41-Kt.60 - 101.085 rubles - the received materials are credited at the actual cost, which includes the amount of interest accrued before the date of posting the materials
Dt.19 - Kt.60 - 20.000 rubles - VAT on purchased materials
Dt.91 - Ct.66 - 4.833 rubles - interest on the loan agreement for the period from January 27 to March 15 is included in operating expenses (120.000 * 0.3 / 365 * 49 = 4.833)
Dt. 66 -Kt.51 - 125.918 rubles - repayment of the loan together with interest.
2. If the received borrowed funds are used by the organization for the acquisition and (or) construction of an investment asset, then the costs of them should be included in the cost of this asset and repaid by depreciation, except when the accounting rules do not provide for depreciation of the asset.
An investment asset is understood as an object of property, the preparation of which for the intended use requires a significant amount of time (fixed assets, property complexes, etc., requiring a lot of time and costs for acquisition and (or) construction).
The inclusion of expenses on loans (credits) received in the initial cost of an investment asset is terminated from the first day of the month following the month when the asset was accepted for accounting as an object of fixed assets or a property complex, or from the first day of the month following the month of actual start of operation (if actual operation began before its acceptance as an object of fixed assets or a property complex). After this date, the costs of borrowings received are included in the operating expenses of the borrowing organization.
3. If the received borrowed funds are used by the organization for other purposes not specified above, then the costs of loans (credits) are included in the operating expenses of the organization.
2.3.1.2 Accounting for loans issued
In cases provided for by law, organizations may raise borrowed funds by issuing promissory notes, issuing and selling bonds - issued loan obligations.
1. PBU 15/01 for the first time prescribes the accounting procedure for transactions related to raising borrowed funds by issuing own bills.
When issuing a promissory note in order to attract borrowed funds, the organization - drawer reflects the amount indicated in the promissory note (promissory note amount) as accounts payable.
If the text of the bill includes a condition on the accrual of interest, then the debt on such a bill is shown at the drawer, taking into account the interest due at the end of the reporting period. In this case, the amount due to the holder for payment of interest is included by the drawer in operating expenses.
If the amount of money received by the organization - drawer when placing a bill is less than the bill amount, then this difference (discount) is included by the drawer in operating expenses.
In order to evenly (monthly) include the amounts of interest or discount due in operating expenses, the organization - issuer may preliminarily take them into account as expenses of future periods. An approximate method of accounting for interest (discount) should be fixed in the Order on the accounting policy of the organization.
Entity A (the borrower) entered into a loan agreement with Entity B (the lender). In accordance with the terms of the loan agreement, organization B transfers to organization A the amount of 470,000 rubles for a period of 3 months with a payment of 30,000 rubles.
The loan amount was received on March 20. In support of its debt under the loan agreement, entity A issues to entity B a promissory note in the amount of 500,000 rubles maturing on June 20.
a) if the accounting policy of organization A provides for a one-time reflection of the discount as part of operating expenses, then the following entries are made in accounting:
Dt.91 - Kt.66 - 30,000 rubles - the amount of the discount is included in the operating expenses of organization A.
June: Dt.66-Kt.51 - 500,000 rubles - the bill presented for payment was repaid.
b) if in the accounting policy the discount amount is preliminarily taken into account as part of deferred expenses, then the following entries are made in accounting:
March: Dt.51 - Kt.66 - 470,000 rubles - the loan amount was received
Dt.97 - Kt.66 - 30,000 rubles - the amount of the discount is reflected in deferred expenses
Dt.91 -Kt.97 - 3587 rubles - the amount of the discount attributable to the period from March 21 to March 31 is written off as operating expenses (30,000 / 92 days * 11 days = 3587 rubles)
April: Dt.91 -Kt.97 - 9783 rubles - the amount of the discount attributable to the period from April 1 to 30 is written off as operating expenses (30,000 / 92 days * 30 days = 9783 rubles)
May: Dt.91 -Kt97 - 10.109 rubles - the amount of the discount attributable to the period from May 1 to May 31 is written off as operating expenses (30000 / 92 days * 31 days = 10109 rubles)
June: Dt.91 -Kt97 - 6521 rubles - the amount of the discount attributable to the period from June 1 to June 20 is written off as operating expenses (30,000 / 92 days * 20 days = 6521 rubles).
2. When an organization raises borrowed funds by issuing and placing bonds, the accounting of operations performed in this case is practically the same as when accounting for bills of exchange.
When bonds are placed at a price lower than their face value, the difference between the placement price and the face value is additionally charged evenly during the circulation period of the bond with Kt. 66(67) in Dt. 91.
a) if the accounting policy of the organization provides for a one-time inclusion of the discount amount in operating expenses, then in the period when the bond is placed, two entries must be made in accounting:
Dt.51-Kt.66 (67) - the amount of money actually received is reflected
Dt.91 - Kt.66 (67) - the sum of the difference between the placement price and the face value of the bond is included in operating expenses.
b) if the accounting policy provides for the reflection of the discount amount as part of deferred expenses, followed by a uniform write-off as part of operating expenses during the period of circulation of the bond, then in the period when the bond is placed in accounting, the following entries should be made:
Dt.51 - Kt.66 (67) - the amount of money actually received is reflected
Dt.97 - Kt.66(67) - the sum of the difference between the offering price and the nominal value of the bond is included in the expenses of future periods.
In the future, monthly during the period of circulation of the bond, the discount amount is written off as part of operating expenses: Dt.91 -Kt.97.
2.3.2 Debt analysis
2.3.2.1 Effect of financial leverage
One of the indicators used to assess the effectiveness of the use of borrowed capital is the effect of financial leverage (EFF):
EGF \u003d (ROA - Zk) * ZK / SK, (1)
EGF \u003d [VER (1 - Kn) - Zk] * ZK / SK, (2)
where ROA is the economic profitability of the total capital after taxes (the ratio of the amount of net profit and interest on the loan, taking into account the tax corrector, to the average annual amount of the total capital),%;
Tsk - the price of borrowed resources, taking into account the tax corrector,%;
Kn - the level of tax withdrawal from profit (the ratio of taxes from profit to the amount of profit after paying interest before tax);
ZK - the average amount of borrowed capital;
SC - the average amount of equity capital.
The effect of financial leverage shows by what percentage the amount of equity increases by attracting borrowed funds into the turnover of the enterprise. A positive EGF occurs in cases where the return on total capital is higher than the weighted average price of borrowed resources, i.e. if ROA > Tsk. For example, return on total capital after tax is 15%, WTO while the price of borrowed resources is 10%. The difference between the cost of borrowed funds and the return on total capital will increase the return on equity. Under such conditions, it is beneficial to increase the leverage of financial leverage, i.e. the share of borrowed capital. If ROA< Цзк. создается отрицательный ЭФР (эффект дубинки), в результате чего происходит «проедание» собственно капитала и это может стать причиной банкротства предприятия. Из этого следует, что заемные средства могут способствовать как накоплению капитала, так и разорению предприятия. Поэтому недаром долги образно сравнивают с заряженным ружьем, которое при умелом обращении с ним может защитить, а при неосторожном - убить.
In an inflationary environment, if debt and interest are not indexed, EGF and return on equity increase as debt service and debt itself are paid for with already depreciated money. Therefore, in this case, when determining the EGF, it is necessary to take into account not the nominal price of borrowed funds, but the real one, which is determined as follows:
Tsk.r. \u003d (Czk.n. -I) / 1 + I (3)
where Tsk.r. - real price of borrowed capital
I - inflation rate for the reporting period
Tsk.n. - nominal price of borrowed capital, taking into account tax savings
Since inflation depreciates both the amount of interest paid and the amount of the debt itself, its impact on the EGF can be presented in more detail:
EGF \u003d (ROA - Zk.n / 1 + I) * ZK / SK + (ZK + I) / SK * (1 + I) * 100 (4)
To determine how the EGF has changed due to each factor of the selected model, you can use the chain substitution method, successively replacing the base level of each factor with the actual one in the reporting period and comparing the EGF before and after the change in the actual factor.
The effect of financial leverage can be calculated not only in general for all borrowed capital, but also for each of its sources (long-term, short-term bank loans, loans, commodity loans, accounts payable, interest-free borrowed resources, etc.)
3. Practical part
Analysis of the use of borrowed funds based on the data of JSC "PLASTIC" by calculating the effect of financial leverage.
Table 3
Indicators |
Reporting period |
|
1. The total amount of gross profit, thousand rubles. |
||
2. Interest payable, thousand rubles. |
||
3. Profit after paying interest before paying taxes, thousand rubles. |
||
4. Taxes from profit, thousand rubles. |
||
5. Level of taxation, coefficient, % |
||
6. Net profit, thousand rubles. |
||
7. The average amount of total capital, thousand rubles. |
||
8. Equity |
||
9. Borrowed capital |
||
10. The ratio of borrowed capital to own (shoulder of financial leverage) |
||
11. Return on equity after taxes (ROA), % |
||
12. Nominal average price of borrowed resources, taking into account the tax corrector, % |
||
13. Inflation rate, % |
||
14. Real price of borrowed funds, taking into account tax savings and inflation index, % |
||
15. The effect of financial leverage |
a) Profit after interest before taxes = Gross profit - interest payable = 732433-301482 = 430951 thousand rubles.
b) Level of taxation = item 4 (taxes from profit) / item 3 (profit after interest before taxes) = = 503 / 430951 * 100% = 0.1167%
c) Net profit = item 3 - item 4 = 430448
d) Profitability ROA = p.1 / p.7 * (1-Kn) *100 = = 732433/ 2775519* (1-0.0114) * 100 = 26.088%
Kn = the ratio of taxes from profit to the amount of profit after interest before tax = 503 / 44267 = 0.0114
e) Nominal price of borrowed resources Tsk.n = item 2 / item 9 * (1-Kn) *100== 301482/ 9359789 (1-0.0114) * 100 = 3.185
f) The real price of borrowed funds Tsk.r = Tsk.n - I (inflation) / 1+ I = (3.185 - 3.1 / 1+3.1) * 100 = 0.5056
g) EGF \u003d (p. 11 - p. 14) * p. 10 \u003d (26.088-0.5056) * 86.222 \u003d 2.205
Conclusion: For each ruble of invested capital, the organization received a profit of 26.088 kopecks in the current year, and actually paid 2.205 kopecks for the use of borrowed funds. Under such conditions, it is beneficial to further increase the leverage of financial leverage, that is, the share of borrowed funds.
Since the return on total capital after tax is 26.088%, while the real price of borrowed funds is 2.205%, the difference between the cost of borrowed funds and the return on total capital allows increasing the return on equity by 23.883%.
Conclusion
At present, the guarantee of a normal process of expanded reproduction is the financing of capital investments by borrowing funds.
Borrowed capital is a part of the capital used by an economic entity that does not belong to him, but is attracted on the basis of a bank, commercial loan or issuance loan on a repayment basis.
Borrowed capital can be used both for the formation of long-term financial resources in the form of fixed assets (capital), and for the formation of short-term (current) financial resources for each production cycle.
The structure of borrowed capital may be different depending on the ownership of the enterprise, the availability of a particular source of financing, etc. In modern economic conditions at Russian enterprises, as a rule, short-term bank loans occupy the largest share in the structure of borrowed funds.
In addition to finding sources of funding, a financial manager must monitor the effectiveness of spending funds. Most companies have many potential cost items and limited capital. In order to select the most rational way to spend funds, the finance manager needs to develop a selection methodology that would accurately identify options that are most consistent with the goals of the organization.
For effective debt management of a company, it is necessary, first of all, to determine their optimal structure for a particular enterprise and in a particular situation: draw up a budget for accounts payable, develop a system of indicators (coefficients) characterizing both a quantitative and qualitative assessment of the state and development of relations with creditors companies and take certain values of such indicators as planned. The second step in the process of optimizing accounts payable should be an analysis of the compliance of actual indicators with their framework level, as well as an analysis of the reasons for the deviations that have arisen. At the third stage, depending on the discrepancies identified and the reasons for their occurrence, a set of practical measures should be developed and implemented to bring the debt structure in line with the planned (optimal) parameters.
This course work discusses in detail the sources and forms of external financing (overdraft, trade credit, tolling, promissory note, factoring, mutual settlements, barter, short-term leasing), as well as methods of keeping records of borrowed funds: accounting for costs of loans and borrowings, accounting for issued loan obligations .
The practical part analyzes the use of borrowed funds.
Bibliography
1. Mironov M.G., Zamedlina E.A., Zharikova E.V. Financial management - M .: ed. "Exam", 2009.
2. Yablukova R.Z. Financial management in questions and answers. - M.: ed. "Prospect", 2010.
3. Blank I.A. Fundamentals of financial management. - M.: 2010.
4. PBU 15/01 "Accounting for loans and credits, and the costs of servicing them."
5. A. Komaha, Financial Director magazine, No. 4/2010.
6. Sirotkin V.B. "Financial management of companies", - SPb2010.
7. Balabanov I.T. “Fundamentals of financial management. How to manage capital? - M. "Finance and Statistics" 2010.
8. Serdyuk V.B. Financial management. Methodology and experience - DSM, 2010.
9. www.conculting.ru
11. Kovalev V.V., Kovalev Vit. B. Analysis of the balance, or How to understand the balance. 2nd ed., revised. and additional M.: Prospekt, 2010 (a).
12. Kovalev V.V., Kovalev Vit. B. Corporate finance and accounting: concepts, algorithms, indicators. Moscow: Prospekt, 2010 (b).
13. Essays on the history of financial science / ed. V.V. Kovalev. M.: Prospekt, 2010.
14. Finance: textbook / ed. V.V. Kovalev. 3rd ed., revised. and additional M.: Prospekt, 2010.
15. Common money market instruments (Van Horn J.K. Vakhovich J.M. Jr. Fundamentals of Financial Management, 2010, pp. 415-422).
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In economic science, the postulate is accepted that an enterprise using its own working capital in economic activities is more stable than an organization that has some part of borrowed funds in its structure. This statement can be disputed, because credit money can allow an enterprise to get more profit if it is used effectively and, accordingly, improve its financial position.
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The difference lies in the cost of capital - the company uses its money for free, you have to pay interest on borrowed money. The proportion between own working capital and borrowed funds must be reasonable, maintaining a high financial stability ratio.
Competent management of accounts payable significantly affects the sustainability of the enterprise: the higher the debt, the more problems the organization experiences, ranging from paying salaries to employees to reducing staff motivation. Relations with partner organizations and tax authorities may deteriorate, which can literally put the organization on the brink of survival.
Among borrowed funds, a special place is occupied by long-term accounts payable.
What it is
Long-term accounts payable (KZ) - the organization's obligations in relation to other business entities, exceeding a period of one year. In order to be able to successfully manage the company's debts, it is necessary to determine their optimal ratio to their own working capital and develop a system of relations with creditors that allows the most profitable use of other people's funds.
On the one hand, it turns out that a long-term KZ is a part, a share of property legally owned by an enterprise, transferred to it by a creditor on the basis of an agreement, on the other hand, it is a debt that acts as an object of created legal obligations.
Given the mechanisms of inflation, it can be seen that the use of long-term debt in the financial activities of the company is useful, since the actual value of money at the time of receipt is significantly different from the value of funds at the time of payment.
The reasons for the emergence of debt can be different: lack of working capital of the enterprise or a long production cycle that requires additional financial injections. Also, one of the main reasons for the occurrence of a long-term short circuit may be the specifics of production.
The appearance of a long-term short-term credit occurs during the acquisition of assets in the event that the buyer is granted a deferred payment. Its actual cost will be equivalent to the amount of money required for repayment on the date of its acceptance for accounting (discount).
The difference between the price in the event of immediate payment and its value at the date of recognition is recognized as amortization. If the price of an asset upon immediate payment is unknown, you can apply the interest rate on bank loans with similar terms or the weighted average interest rate of the Central Bank. Tax liabilities cannot be discounted.
What applies
The chart of accounts in Russia defines 7 main types of debts as long-term liabilities:
- long-term bank loans - the amounts that the company must pay to creditors, taking into account accrued interest;
- loans and credits taken from non-bank sources (for example, a loan from a founder);
- promissory notes with a maturity of more than one year;
- bonds issued by the company with a maturity of more than one year;
- deferred tax liabilities are the amount of taxes due in the near future. A similar situation may arise if there are discrepancies between accounting and tax accounting standards and accounting indicators exceed the amount of tax in the reporting tax period;
- pension provision of employees - the planned obligations of the enterprise for payments to retired former employees of the organization. This item reflects the amount of money required to be paid today against future pension obligations;
- long-term financial lease obligations.
Timing
Long-term loan commitments include all debt with maturities of more than 12 months or after the operating cycle if it is longer than one year. They will be reflected as the present value of future payments.
Long-term accounts payable in the balance sheet
Every accountant knows that long-term KZ in the balance sheet is accounted for in section IV with the same title: Long-term liabilities of the balance sheet. It is in the passive part of the balance sheet and contains numerical data on debts with maturities exceeding one year.
Line 1410 "Borrowed funds"
In this line, based on the accounting rules, the amounts of long-term loans reflected in accounting on account 67 - “calculations on long-term loans and loans” should be indicated. Only amounts actually received by the borrower should be reflected in long-term debt.
If the subject of filling is borrowed funds in the form of loan agreements, their execution is completely different. Based on the receipt of a loan, the accountant must reflect in the balance sheet not the actual amount of funds received, but the figure specified in the contract.
When compiling an explanatory accounting note, the same approach is used: it must indicate the lost amounts under the loan agreement.
Filling in line 1410 Loans and credits includes the amount of loans and credits received by the organization. It also reflects the accrued interest at the end of the reporting period.
Line 1420 "Deferred tax liabilities"
In the next line, the accountant is required to reflect the amount of deferred tax liabilities that are part of the budget allocations. Their presence leads to an increase in the total amount of payment of corporate income tax. How do they arise? It's all about the difference between the two approaches: traditionally, the policy of the tax authorities differs from the requirements of accounting, based on the requirements of the Ministry of Finance.
When filling out this line, the accountant takes account 77 as a basis.
Line 1430 "Estimated liabilities"
In line 1430, the amount of long-term estimated liabilities is entered, including, among other things, reserves for future expenses (account 96).
This may include:
- unavoidable costs associated with the economic activity of the organization;
- probable expenses whose occurrence can be foreseen. They reduce the economic benefit of the enterprise;
- amounts of possible costs that can be valued. Estimated liabilities also include the payment of holiday money and insurance premiums accrued on it.
Accounting rules prohibit this line from including unfulfilled contracts under which one of the counterparties has not yet fulfilled its obligations to the other.
Also, reserves, whose formation comes from the retained earnings of the organization, are not subject to inclusion in line 1430.
The calculation of estimated liabilities should be formally fixed in the accounting policy of the enterprise.
Line 1450 "Other liabilities"
In line 1450, the accountant indicates the totality of other long-term liabilities that were not included in the previous lines of the balance sheet.
This, as a rule, includes credit balances on accounts: 60, 62, 68, 69, 75, 76, 86.
Settlements with suppliers and contractors, buyers and customers, tax and social insurance settlements, targeted financing - everything is reflected in line 1450.
The final line 1400 summarizes all long-term liabilities of the enterprise at the end of the reporting period and shows the total amount of credit debt
Information requirements for a long-term short circuit, as a rule, are available at the enterprise.
Sources of information can be:
- loan agreements with banking or other institutions;
- information on the terms of the bond issue;
- long-term financial lease agreements.
Thus, in conclusion, we note that the presence of accounts payable indicates the resulting gaps between the needs of the enterprise to pay current expenses and its capabilities at the moment, requiring the attraction of borrowed funds.
In the process of economic activity, the role of a contractor or customer can be played by any association. Accounts receivable and accounts payable are formed on his accounts during settlements. The article deals with the concept and types of accounts payable, as well as aspects of each of the categories.
Features of accounts receivable
Today, the definition of accounts receivable means the total debt of associations, citizens and employees of a particular structure. Simply put, these are the debts of buyers for the purchased product, services or work, the debt of accountable persons for the funds issued to them. Debtors are individuals and enterprises that owe a certain amount of money to a particular organization.
Classification of receivables
It should be noted that there are quite a lot of concepts and types of receivables and payables. There are several types of categories according to the content of obligations:
- Debts related to the sale of goods, services, work or products.
- Debts not related to the sale of goods, services, products or work.
According to the criterion of duration, receivables are divided into short-term and long-term. According to the factor of timeliness of payment, the following categories of debt are distinguished: normal and overdue (doubtful and hopeless).
The concept and types of accounts payable
Accounts payable, as one of the categories of legal significance, is understood as a relationship of a binding nature between an enterprise and its creditors. The economic aspect is represented by the organization's cash (most often) and inventory items. Despite the fact that the structure uses all currently known types of accounts payable, it is obliged to return or pay creditors the due part of the property complex. Creditors, in turn, have the full right to demand the performance of an obligation.
Duality of definition
The essence and types of receivables and payables are largely determined by the duality of the legal nature. The category is the property of the organization as one of the parts of the common property according to the right of ownership in relation to money or things received on loan. The considered economic category, being the object of legal obligations, is the company's debts to creditors. Creditors are persons who have the right to claim or recover a part of the property complex from the specified association.
Features of accounts payable
According to a simplified view, accounts payable is a type of obligation to creditors, something that an organization must pay to a legal entity or individual. A complete definition implies a combination of all the listed features. For example, accounts payable - part of the common property of the organization, acting in the form of debt obligations arising from various legal grounds, to creditors, that is, eligible persons.
Mandatory aspects of accounts payable
It is worth remembering that all types of accounts payable of the enterprise are subject to accounting and should be reflected in the balance sheet.
The debtor can collect debts by force when the creditor does not take any actions aimed at voluntary recovery of debts. The recovery procedure, depending on the type of accounts payable, can be both judicial and extrajudicial.
Different types of debt
Accounts payable currently means the creditor's debts of various origins. Since all types of accounts payable known from textbooks are vivid examples of sources of material resources at the disposal of the organization and displayed in the liability of the balance sheet. Accounting for the categories described in the article is kept separately for each loan. The summary indicators indicate the total accounts payable. It is issued only when the amount is divided into several groups.
Short-term financial improvement
The essence and types of accounts payable suggest that attracting borrowed funds into the organization's cash flow allows you to temporarily improve the overall financial condition of the structure. The main feature is that borrowed funds do not stay in circulation for a long time, returning according to the terms specified in the official contract.
Otherwise, an overdue type of receivables and payables of the enterprise arises. This implies the payment of a fine and the deterioration of the financial life of the company. For this reason, the composition and prescription, the causes and frequency of its occurrence of debt must be studied.
free credit
According to its definition, all types of accounts payable are a free loan and are included in the category of cash and material resources involved in the turnover of the structure. Accounts payable, unlike stable liabilities, is not a planned source of working capital formation and is a short-term liability for an enterprise.
The considered part of the organization is determined by regularities, since it arises due to the peculiarities of the calculations. Despite this, the violation of settlement and payment discipline leads to the emergence of accounts payable. In fact, it is a consequence of non-compliance with the deadlines for filing documents and paying for goods and services.
Short term loan
The type of accounts payable and receivable with the calculation of the short-term type used by the organization. To form such funds, internal sources are used. The organization accrues them daily according to various types of accounts. The maturity of obligations under these accounts payable does not exceed one month. The funds included in accounts payable, after being credited to the account, cease to be the property of the organization, since they are used only for the period specified for repayment of current obligations. According to the economic content, they are a kind of borrowed capital.
Classification of accounts payable by types
According to the current classification, accounts payable are divided into several types according to certain criteria:
- Suppliers and contractors.
- Transfer of premiums on the insurance property of the company.
- Transfer of contributions for personal insurance of employees.
- Bills payable.
- The founders agree with the payment of income and other things.
Depending on the legal regime and legal basis, debts are divided into three groups:
- Before the employees of the organization - for example, debts for the payment of wages.
- Before the budget and social funds.
- Before partners and contractors.
Debts are classified into two categories upon the fact of payment:
- Overdue - maturity dates have come.
- Non-overdue - debts that have not yet matured.
The structure of accounts payable includes the debt of the organization:
- to suppliers and contractors.
- Before the state budget.
- To organizations and employees.
- Before the state off-budget funds.
- to third party creditors.
- According to issued loans and credits.
Distinctive features
Accounts payable, considered in the article, as a form of borrowed capital is determined by key characteristics:
- Acts as a free source of borrowed funds. Accounts payable as a source of capital formation allows to reduce its borrowing share and total cost.
- The duration of the financial cycle directly depends on the amount of debt. It affects the amount of cash needed to finance current assets. The larger the amount of debt, the less money the structure must attract to finance its own economic activity.
- The volume of economic activity of the organization, including the volume of manufactured and sold products, affects the total amount of debt. The company's expenses increase as the volume of output increases, respectively, this leads to an increase in the amount of accounts payable.
The volume of all purchases made by the structure affects the amount of accounts payable. The factors specified in the contract with counterparties, the terms of settlement with suppliers and contractors, the policy adopted by the organization regarding the repayment of accounts payable, the saturation of the market with a specific product, the settlement system adopted in the structure, the quality and consistency of using the results of the analysis.
The quality and turnover of accounts payable increases in proportion to the increase in non-cash payments. The solvency and stability of the organization increases with a decrease in debt. Termination of the debt is carried out by the contractor.
Short term debt
Classical short-term debt can arise both to individuals and to legal entities. The maturity of such debts does not exceed 12 calendar months.
There are several situations in which short-term debt arises:
- In case of non-payment for goods sold, work performed or services rendered to contractors and sellers.
- To buyers according to advances received on account of deliveries in the future.
- To suppliers for deliveries not accompanied by invoices.
- To employees associated with the payment of wages.
- Bank loans and short-term loans.
- Before budgetary and off-budgetary funds for various penalties, contributions, fines, taxes and fees.
Long term type of debt
Permissible accounts payable is considered when its maturity has not yet come. Debts with a maturity of more than one year are considered long-term.
This type of debt includes:
- Long-term liabilities on loans issued by banking organizations and loans taken from other structures.
- Promissory notes and bonds with a maturity of more than one year.
- Deferred tax liabilities.
- Long-term lease obligations.
Collection of overdue long-term debt is carried out in court after filing a claim filed by the creditor. Such debts are classified as problematic and collected by court order.
Otherwise, overdue accounts payable may arise, which leads to the payment of fines and deterioration of the financial condition. Therefore, in the management process, it is necessary to study the composition, prescription of accounts payable, the presence, frequency and causes of formation.
Accounts payable is essentially a free loan and is one of the funds attracted by the enterprise into the economic circulation. Unlike stable liabilities, accounts payable is not a planned source of working capital formation. Accounts payable refers to short-term liabilities of the enterprise.
Part of the accounts payable is natural, as it arises in connection with the peculiarities of the calculations. However, in most cases, accounts payable arise as a result of violation of settlement and payment discipline and are the result of non-compliance by the enterprise with the terms of payment for products and settlement documents.
Accounts payable characterizes the most short-term type of borrowed funds used by the enterprise, formed from internal sources.
The accrual of funds on various types of these accounts is carried out by the enterprise daily, and the repayment of obligations under these accounts payable is carried out within a certain period of time in the range of one month. Since, from the moment of accrual, the funds included in accounts payable are no longer the property of the enterprise, but are only used by them until the maturity of obligations, in their economic content they are a type of borrowed capital.
Accounts payable, as a form of borrowed capital, is characterized by the following main features:
1. This is a free source of leveraged funds. As a free source of capital formation, it provides a reduction not only in its borrowed part, but also in the entire cost of capital of the enterprise.
2. The size affects the duration of the financial cycle of the enterprise. It affects to a certain extent the required amount of funds to finance current assets. The higher the relative amount of accounts payable, the smaller the amount of funds the company needs to attract for the current financing of its business activities.
3. The amount of accounts payable is directly dependent on the volume of economic activity of the enterprise, primarily on the volume of production and sales. With the growth of the volume of production and sales of products, the expenses of the enterprise accrued as part of accounts payable increase, and, accordingly, its total amount increases, and vice versa.
The predicted size for most species is only an estimate. This is due to the fact that the size of many accruals that are part of accounts payable cannot be accurately quantified due to the uncertainty of many parameters of future economic activity.
The amount for its individual types and for the enterprise as a whole depends on the frequency of payments of accrued funds. The frequency of these payments is regulated by state regulatory legal acts, the terms of contracts with business partners, and only a small part of them - by the internal standards of the enterprise. This high degree of dependence of the periodicity of payments on individual accounts that are part of accounts payable on external factors determines the low level of controllability of this source of borrowed funds in the process of financial management.
The amount of accounts payable of the enterprise is affected by the total volume of purchases and the share of acquisitions in it on the terms of subsequent payment, the terms of contracts with counterparties; terms of settlements with suppliers and contractors, the degree of saturation of the market with this product; the policy of repayment of accounts payable, the quality of the analysis of accounts payable and the consistency in the use of its results, the settlement system adopted at the enterprise.
With an increase in non-cash payments, the turnover and quality of accounts payable increases, and the size decreases, therefore, the solvency and stability of the enterprise increases.
Accounts payable can be terminated by the fulfillment of obligations (including offset), and also written off as unclaimed.
1.2 Types of accounts payable
Among the main types of accounts payable are debts for:
1. transfers of premiums for insurance of the property of the enterprise;
2. by transferring contributions for personal insurance of personnel;
3.suppliers and contractors;
4. bills payable;
5. subsidiaries or dependent companies and personnel of the organization;
6. transfers of taxes to the budgets of different levels;
7. founders on payment of income;
9. contributions to off-budget funds of social insurance, medical insurance and pension fund, etc.
Depending on the legal nature and legal regime, accounts payable can be reduced to three groups:
1. Debt of the organization to the budget and social funds,
2. The debt of the organization to its personnel: debts on payments to employees of wages, compensations, payments in order to compensate for harm caused to the health of an employee or due to the death of an employee at work,
3. Debts to partners and contractors under contractual and cooperative obligations: debts on payments to suppliers for delivered goods, to contractors - for work performed to return received but unworked advances, payment of promissory notes.
Upon payment, accounts payable can be:
overdue (debts on obligations, the maturity of which at the time of the balance sheet has come);
not overdue (debts of the enterprise for obligations, the maturity of which at the time of the balance sheet has not come).
As part of overdue accounts payable, two types of accounts payable can be distinguished:
1. accounts payable, the chances of repaying which, despite the missed repayment period, the company has retained;
2. accounts payable, the repayment of which is unrealistic for any factual reasons. Unrealistic repayment of overdue debts may be due, for example, to the expiration of the limitation period for the enforcement of debt.
The reality and unreality of debt repayment is assessed by the debtor organization itself, taking into account specific circumstances.
The most common type of accounts payable is debt to suppliers and contractors for supplied inventories, services rendered and work not paid on time.
In the composition of accounts payable, the debt of the organization is allocated:
1. to suppliers and contractors (balances as of the reporting date on the credit of accounts 60 “Settlements with suppliers and contractors” and 76 “Settlements with various debtors and creditors”);
A liability is classified as current if it satisfies any of the following criteria:
- it is expected to be settled within the framework of the normal operating cycle of the enterprise;
- it is intended primarily for trading purposes;
- it is due to be repaid within twelve months after the reporting date;
— or the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other liabilities should be classified as non-current.
An entity classifies its financial liabilities as current if they are due to be settled within twelve months after the reporting date, even if:
— the original maturity was more than twelve months;
— after the reporting date and before the approval of the financial statements, an agreement was concluded to refinance or change the payment schedule on a long-term basis.
If an entity expects and has the discretion to refinance or extend any liability for a period of at least twelve months after the reporting date under an existing credit facility, it classifies that liability as non-current, even if that liability would otherwise be subject to repayment within a shorter period. However, if the entity has no discretion to refinance or renew the liability (for example, in the absence of a refinancing agreement), the potential for refinancing is disregarded and the liability is classified as current.
If an entity is in breach of any of the terms of a long-term loan agreement on or before the balance sheet date, causing the liability to be repayable on demand, then the liability is classified as current, even if the lender has agreed, after the balance sheet date and before approval of the financial reporting, not to demand payment on the basis of the violation committed. The liability is classified as current because, at the reporting date, the entity did not have an unconditional right to defer settlement of its settlement for at least twelve months after the reporting date.
However, a liability is classified as non-current if, at the reporting date, the creditor has agreed to grant a grace period ending no earlier than twelve months after the reporting date, during which the entity can remedy the breach and during which the creditor cannot demand immediate repayment.
- long-term bank loans used for long-term capital investments: for the purchase of expensive equipment, construction of buildings, modernization of production;
- long-term loans, reflecting long-term loans (except for bank loans) and other funds raised for a period of more than one year, including long-term bonds issued by the enterprise and long-term promissory notes issued.
Some short-term liabilities, such as trade payables and certain accruals for payroll and other operating costs, form part of the working capital used during the normal operating cycle of an entity. Such operating items are classified as current liabilities even if they mature no earlier than twelve months after the reporting date. The classification of assets and liabilities of an enterprise uses the same normal operating cycle. If it is not possible to clearly define the normal operating cycle of the enterprise, it is assumed that its duration is twelve months.
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Other current liabilities do not settle in the normal operating cycle but are due within twelve months of the reporting date or held primarily for trading purposes. Examples are financial liabilities classified as held for trading in accordance with IAS 39, bank overdrafts, as well as the current component of long-term financial liabilities, dividends payable, income taxes and other non-trading payables. Financial liabilities that provide long-term financing (ie that do not form part of the working capital used during the entity's normal operating cycle) and do not fall due within twelve months after the reporting date are long-term liabilities.
- liabilities that are covered by working capital or are repaid as a result of the formation of new short-term liabilities. These obligations are repaid over a relatively short period of time (usually within a year). Short-term liabilities are presented in the balance sheet either at their current price, which reflects the future cash costs to pay off these liabilities, or at the price at the date of debt redemption.
Current liabilities include items such as:
- bills and bills payable arising from the provision of credit to the enterprise, debt certificates of the receipt of a short-term loan by the company;
- tax debt, which is essentially a form of credit provided by the state to this company;
- wage arrears;
- part of long-term liabilities, subject to repayment in the current period.
Short-term accounts payable are debts that are normally due within one year and are usually paid from working capital. Accounts payable, promissory notes issued, interest arrears, dividends owed, wage arrears and advances received are classified as short-term liabilities, which are discussed in this chapter.
Accounts payable are amounts due to be paid to creditors for purchased products (services received). In the balance sheet, accounts payable are reflected in a single amount, which is made up of individual balances.
Notes payable are an unconditional written commitment to pay a specified amount at a specified time in the future. The reasons for the promissory notes issued are the receipt of bank loans, the purchase of assets or the issuance of promissory notes to secure accounts payable.
Debt on short-term loans and borrowings — amounts of borrowed funds outstanding at the end of the reporting period, subject to repayment in accordance with agreements within 12 months after the reporting date.
Interest payable is interest accrued on, for example, bills or bonds, short-term loans and loans. At the balance sheet date, this accrued interest has not yet been paid.
Dividends payable are dividends payable to shareholders and represent the distribution of profits. As of the balance sheet date, these declared dividends have not yet been paid and are therefore a debt of the company.
Payroll arrears are employee wages owed but not yet paid at the balance sheet date. As of the balance sheet date, wages have not yet been paid due to the fact that the due date for payment of wages has not come.
Other accounts payable are amounts due for payment for products or services that are not directly related to the main activities of the enterprise.
Advances received arise upon receipt of payment for the supply of material assets or for the performance of work, for example, received by a publishing house when subscribing to a magazine or making an advance payment for raw materials by a customer. Advances received represent a commitment to return an asset received or to provide a specific service or other contractual obligation, usually within the period following the reporting period.
Long-term liabilities are liabilities with maturities exceeding 12 months.
Long-term liabilities are debts of the organization on credits and loans. Long-term liabilities also include deferred tax liabilities. Assessing the financial condition of an organization that has long-term borrowings, one cannot say that their presence is negative. In addition, long-term liabilities can be equated to equity. Also, taking into account inflationary processes, we can assume that the presence of long-term liabilities is a beneficial factor for the organization, since their real value at the time of receipt differs significantly from the value at the time of payment.
Types of long-term liabilities:
— loans and borrowings with a maturity exceeding 12 months;
— promissory notes issued with a maturity exceeding 12 months;
— bonds issued for a period of more than 12 months;
- deferred tax liabilities.
Long-term loans to banks are issued for the acquisition of investment assets, for replenishment of working capital or for the repayment of current liabilities.
When assessing the financial condition of an enterprise, long-term liabilities are usually divided into two groups:
— part of long-term accounts payable that will be repaid more than 12 months after the reporting date;
- part of long-term accounts payable, which will be repaid before the expiration of the next 12 months after the reporting date.
The sustainability of the economic development of an enterprise is impossible without financial stability. It is sustainability that serves as the guarantor of survival and the basis for the firm position of the enterprise. The stability of the enterprise is influenced by various factors: the position of the enterprise in the commodity market; its potential in business cooperation; degree of dependence on external creditors and investors; presence of insolvent debtors; efficiency of business and financial transactions, etc. All these factors differ in structure (simple and complex), in time of impact on the enterprise (permanent and temporary), in the importance of the impact on the result (primary and secondary). All factors, depending on the place of their occurrence, can be divided into internal, depending on the organization of the work of the enterprise itself, and external, not subject to the will of the organization.
The greatest influence on the activity of the enterprise is exerted by internal factors. Among them, a special place is occupied by the presence of accounts payable in the enterprise.
The shortage of funds in the economy and the insolvency of many enterprises have made the issues of working with creditors one of the main functions of financial managers. According to the general recognition of the leaders and specialists of Russian companies, the problem of managing accounts payable is greatly complicated by the imperfection of the regulatory and legislative framework in terms of debt collection. These reasons have led to a different perception of the essence of accounts payable management in Russia compared to countries with a stable market economy: we have reduced it to the search for chains of netting, to the assessment of the possibilities of barter and other surrogate payments.
A modern system of accounts payable management should include the whole set of methods of analysis, control and evaluation of them. At the same time, the management of accounts payable is work with the sources of their occurrence, the formation of the credit policy of the enterprise and the organization of contractual work, as well as the management of debt obligations.
Conducting business activities, almost any company cannot do without accounts payable. If you pay off counterparties in a timely manner, then no problems arise.
Accounts payable management involves the use by the organization of the most appropriate and profitable forms and terms of settlements with counterparties, and in the most general terms, it comes down to maintaining the financial stability of the company while reducing the deficit of working capital.
The effective management of the company's debts is largely determined by a selective approach to counterparties and a flexible system of settlements with them.
In practice, in order to ensure that credit obligations arising in the course of business activities do not threaten the financial well-being of the company and its level of profitability, the management of an organization or enterprise (including lawyers and accountants) develops a detailed strategy in advance regarding the nature of attracting and using borrowed capital. In this case, the first and fundamental question is whether it is worth doing business with your own funds or attracting funds from other companies or a bank.
The problems of accounts payable management are very relevant for most Russian enterprises, but today, due to the lack of financial resources, as well as trained personnel in many enterprises, their solution is not given due attention.
The concept and types of accounts payable
Accounts payable - an enterprise's debt to counterparties, individual entrepreneurs, individuals, including its own employees, formed in the course of settlements for acquired production and material stocks, works and services, in settlements with the budget, as well as in settlements of wages.
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In other words, the obligations of the enterprise that arise in the course of its current production activities constitute accounts payable, that is, the totality of financial obligations to creditors.
In accounting, it is considered that the formation of accounts payable takes place with the simultaneous observance of such conditions as:
the debt is formed in accordance with a specific contract, the requirement of legislation and regulations, business practices;
the amount of debt can be quantified;
the formation of debt will lead to a decrease in the economic benefits of the enterprise.
Accounts payable are accounted for in the reporting period in which, in accordance with the above procedure, they must be recognized, regardless of the time of actual payment of funds and other form of fulfillment by the enterprise of its obligations.
A creditor is a legal or natural person who provides an enterprise with money or goods on credit and is entitled to the subsequent reimbursement of these funds in cash or in exchange for other goods or works (services). In a broad sense, creditors include banks and other credit institutions, enterprises that sell products and goods with subsequent payment (within the grace period of payment), employees who have accrued but not paid wages, tax authorities in terms of accrued but not paid taxes and equivalent payments, etc.
The economic concept of accounts payable is that it is not only part of the property of the enterprise (usually cash), but also inventory items (for example, obligations under a commodity loan).
The legal concept of accounts payable is a special part of the enterprise's property, which is the subject of mandatory legal relations between the enterprise and its creditors. The enterprise owns and uses accounts payable, but it is obliged to return this part of the property or pay creditors who have rights, money for it.
Based on the above characteristics, accounts payable can be defined as a part of the property of an enterprise that is the subject of debt obligations of a debtor enterprise arising from various legal grounds to authorized persons - creditors, subject to accounting and reflection in the balance sheet, as debts of the enterprise balance holder.
The concept of "accounts payable" covers the debt obligations of the debtor enterprise, which have a different origin, and, consequently, a different legal nature and legal regime, which, in fact, determines the practical need to use an agreed conceptual apparatus. Since accounts payable is one of the sources of funds at the disposal of the debtor, it is shown in the liabilities side of the balance sheet. Accounting for accounts payable is carried out for each creditor separately, and in generalizing indicators they reflect the total amount of accounts payable.
Accounts payable is divided into short-term or long-term accounts payable (long-term and short-term liabilities).
Long-term liabilities include:
long-term bank loans used for long-term capital investments: for the purchase of expensive equipment, construction of buildings, modernization of production;
long-term loans reflecting long-term loans (except for bank loans) and other borrowed funds for a period of more than one year, including long-term bonds issued by the enterprise and long-term promissory notes issued.
Short-term liabilities include:
liabilities that are covered by working capital or repaid as a result of the formation of new short-term liabilities. These obligations are repaid over a relatively short period of time (usually within a year). Short-term liabilities are presented in the balance sheet either at their current price, which reflects the future cash costs to pay off these liabilities, or at the price at the date of debt redemption.
Short-term liabilities include items such as invoices and bills payable arising from the provision of a loan to an enterprise, debt certificates of a short-term loan received by a company; tax arrears, which are essentially a form of credit provided by the state to this company; wage arrears; part of long-term liabilities due in the current period.
1.2 Goals and objectives of accounts payable management
Accounts payable management means the use by the enterprise of the forms, terms, and volumes of settlements with counterparties that are most acceptable to it. Accounts payable management involves a selective approach to the counterparties of the enterprise, which makes it possible to:
evaluate the effectiveness of the credit policy of counterparties, determine the cost of accounts payable, taking into account discounts, bonuses, deferrals, credit limits and obligations;
make decisions on the expediency of working with counterparties both at the operational and strategic levels;
increase the profitability of accounts payable and the enterprise as a whole;
coordinate the management of accounts payable and receivable, which will increase the financial stability of the enterprise;
promptly identify areas and eliminate the causes of inefficient management of accounts payable;
to motivate employees to solve problems of accounts payable management .
The company's accounts payable management policy is to ensure the timely accrual and payment of funds included in its composition. We single out the following stages of the analysis of accounts payable:
1. determination of the structure of the total accounts payable of the enterprise at the end of each reporting period, analysis of the dynamics of the calculated indicators for a number of years;
2. determination of the amount of overdue accounts payable in its general structure;
3. ensuring control over the timeliness of the accrual and payment of funds in the context of certain types of accounts payable;
4. comparison of the amounts of receivables and payables of the enterprise, as well as analysis of the dynamics of their changes over a number of reporting periods.
Internal accounts payable (or internal accrual accounts) characterize the shortest-term type of borrowed funds used by the enterprise, generated by it from internal sources. Accruals of funds on various types of these accounts are made by the enterprise on a daily basis (as current business operations are carried out), and the repayment of obligations on this internal debt is made within certain (set) terms in the range of up to one month. Since from the moment of accrual, the funds included in the internal accounts payable are no longer the property of the enterprise, but are only used by it until the maturity of the obligations, in terms of their economic content they are a type of borrowed capital.
As a form of borrowed capital used by an enterprise in the course of its business activities, internal accounts payable is characterized by the following main features:
The concept of accounts payable is found in the accounting and auditing of many organizations very often.
Types of accounts payable
In the balance sheet, you can find several articles that are devoted to accounts payable. Its main types are as follows:
to suppliers for products and services; before employees for non-payment or delay of wages; before the tax office, associated with all kinds of taxes and fees in the organization; to banking organizations and other off-budget funds; to others not described above.
Also, accounts payable very often include debt to the founders of the organization, for example, for non-payment of dividends on time.
Thus, we can conclude that the debt to creditors is the unliquidated obligations of the company to other business entities that provided this organization with certain types of services or sold goods. The most common type of accounts payable is obligations to suppliers and contractors, in other words, for the provided materials in debt, without which the enterprise cannot function.
How to manage debt
In order for the obligation to creditors not to turn into a problem for the enterprise, it needs to learn how to manage. This can be done with several steps:
Assess the types of accounts payable for the enterprise and their impact on the financial stability of the organization. This is done using the balance sheet. Calculation of coefficients; Measures to reduce creditors.
Analysis and regulation of accounts payable at the enterprise should be handled by an accountant. Accordingly, it is very important that the accountant at your enterprise has the necessary qualifications and has experience in working with debts.
In conclusion, it should be noted that the less obligations to creditors an enterprise has, the more stable it is considered. From this we can conclude that the high creditor of the enterprise adversely affects the financial stability of the organization, and also negatively affects its solvency and liquidity. To assess the volume of credit obligations, there are special coefficients with which you can find out the level of such debt. Also, many banks and investors, when studying the financial performance of an enterprise, pay attention to accounts payable.
Accounts payable is:
(Accounts payable)
Section 1. The essence of accounts payable.
Section 2 Analysis accounts payable .
Accounts payable— is the debt of the enterprise to other legal and physical. persons as a result of previous actions (events).
Accounts payable - is the debt of the subject ( enterprises. companies, physical faces) to other persons, which this entity is obliged to repay.
The essence of accounts payable
accounts payable arises if the date of receipt of services (works, goods, materials, etc.) does not coincide with the date of their actual payment.
Responsibility for malicious evasion of the return of accounts payable is provided for in Article 177 of the Criminal Code of the Russian Federation.
In accounting, it is customary to distinguish several types of accounts payable: