Question

What is commonly used to determine if you should give customers an A/R Account?

Answer 1

Their credit score, business plan and the ability to actually repay the loan/amount of the merchandise received.

Answer 2

Answer:

Unlike accounts payable which are the bills a firm or company is yet to pay to a vendor for goods and services they have bought from the vendor, an A/R (accounts receivable) account, are bills due to a company for goods an services sold to a vendor but not yet paid for by the vendor. To give a customer an A/R account, a credit report showing a detailed breakdown and history of past transactions with such customer should be checked first. Other criteria may then be checked such as the customer's source of income and their method of paying back.

Hope this helps!