INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 04,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1585
ACCOUNTING FOR RECEIVABLES AND PAYABLES: INTERNATIONAL
PRACTICES AND TRENDS
Asraqulova Azizakhon Khasanovna
Lecturer at Kokand Railway College, Uzbekistan
Abstract:
This article analyzes the accounting system for receivables and payables, their
presentation in financial statements, compliance with international accounting standards, and
their impact on effective financial management. Furthermore, the comparison between
advanced international practices and national approaches is provided, along with
recommendations for improvement.
Keywords:
accounts receivable, accounts payable, IFRS, financial reporting, accounting,
assets, liabilities.
Introduction
Receivables and payables are among the primary indicators of a business entity’s financial
position. Proper accounting and management of these items not only ensure liquidity but also
reflect the level of trust the company holds among investors and stakeholders. Accounting in
accordance with International Financial Reporting Standards (IFRS) is an integral part of
global economic integration.
Nature and Types of Receivables and Payables
Accounts receivable represent funds owed to a company by third parties for goods sold or
services rendered. In financial reporting, these are classified as current assets.
Accounts payable refer to a company’s obligations to suppliers or service providers, whether
due or overdue, and are classified as current liabilities.
IFRS Approaches to Receivables and Payables
IFRS 9 and IFRS 15 play a critical role in the recognition and measurement of receivables:
IFRS 15 requires revenue to be recognized based on contracts with customers, thereby
forming the basis for receivables.
IFRS 9 introduces the Expected Credit Loss (ECL) model for financial assets, including
receivables, which must be assessed for potential losses.
Payables are recognized as liabilities under IFRS and must be reported based on contractual
obligations.
Comparison Between National and International Practices
INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 04,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1586
While Uzbekistan’s national accounting standards give attention to the recognition of
receivables and payables, there are differences when compared with international practices.
These include:
Loss assessment models,
Revenue recognition timing,
Application of discounting methods.
Challenges in Managing Receivables and Payables
Many enterprises face increasing receivables, leading to disrupted cash flows and higher
reliance on credit. Recommended measures include:
Improving credit policy;
Implementing customer rating systems;
Enhancing monitoring of payment deadlines.
Financial Analysis of Receivables and Payables
Analyzing the ratio between receivables and payables provides insight into cash flow,
financial discipline, and management efficiency:
Receivables turnover ratio = Sales / Average Accounts Receivable
Payables turnover ratio = Purchases / Average Accounts Payable
Low receivables turnover indicates poor payment discipline by clients, while high payables
turnover may signal liquidity pressure due to quick supplier payments.
Digital Management of Receivables and Payables
Digital transformation and ERP (Enterprise Resource Planning) systems have significantly
enhanced the efficiency of receivables and payables management. These systems provide:
Complete historical data on each client or supplier,
Automated alerts for due dates,
Real-time reporting capabilities.
Widely used systems include SAP, Oracle NetSuite, and 1C Accounting.
Sectoral Differences
Receivables and payables vary across industries:
Retail and trade: High turnover and short-term receivables;
INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 04,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1587
Construction and manufacturing: Longer credit terms and phased payments;
Service sectors: Often operate on advances or contract-based payments.
These variations must be considered in developing accounting policies
Risk Management in Receivables and Payables
To minimize financial risks, the following practices are recommended:
Setting credit limits for customers;
Insuring large receivables;
Diversifying the customer base;
Creating reserves for risky customers under IFRS 9.
10. Representation in Financial Statements
Receivables and payables must be correctly classified and presented:
Statement of Financial Position:
Receivables under "Current Assets"
Payables under "Current Liabilities"
Cash Flow Statement:
Increase in receivables reduces cash flowIncrease in payables may indicate cash savings
Income Statement: While not directly listed, receivables and payables influence revenue and
expense flows.
Causes of Bad Debts
Uncollected receivables often result in bad debts due to:
Weak financial condition of clients;
Lack of strict contract terms;
Poor monitoring systems;
Weak internal controls;
Economic downturns and decreased payment discipline.
Implementing risk assessment systems is vital.
Normalization of Receivables and Payables
INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 04,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1588
Normalization involves setting optimal levels for receivables and payables.
Recommendations include:
Maintaining a balanced ratio (ideally near 1);
Implementing standard payment terms (e.g., “Net 30”);
Conducting regular internal audits.
Empirical Findings
Global studies show that high receivables are associated with:
Liberal credit policies in SMEs;
Competitive strategies in new markets;
Delayed payments in government-related contracts.
These findings lead to the need for policy improvements.
Practical Recommendations
1. Implement customer credit scoring systems.
2. Include strict payment terms and penalties in contracts.
3. Use digital platforms for real-time monitoring.
4. Negotiate extended terms with suppliers to improve liquidity.
5. Strengthen reserve policies in line with IFRS 9.
Conclusion
Accurate accounting and effective management of receivables and payables are crucial for
the financial stability and credibility of any business entity. Considering international
experience, national approaches should be enhanced, particularly by fully adopting IFRS to
improve financial transparency and investor confidence.
References:
1. IFRS Foundation. (2023). International Financial Reporting Standards (IFRS).
2. Ministry of Finance of the Republic of Uzbekistan. (2024). National Accounting Standards.
3. Kaplan Financial. (2022). Financial Reporting Study Text.
4. Drury, C. (2020). Management and Cost Accounting. Cengage Learning.
