With easy credit, charge cards, corporate cards, why do we even have account receivable any more?  Isn’t it archaic? 

 

We have it because it increases sales.  True, it is a “traditional” account (and business practice), but you can bet that if it didn’t help sales it would disappear.

 

You know how complex and complicated your personal accounts can become; multiply that by orders of magnitude and you’ll begin to get an idea of how complex business accounts and transactions can be.  An account like Account Receivable is the PERFECT account to keep track of those short-term credit items. 

 

Most of us are impulse buyers.  Sellers have learned that very well.  It’s in their best interests to allow us to buy NOW.  If we were forced to wait, we might find some other use for the money; decide we could live without the item, etc.  Bottom line:  Without credit sales would decrease.  It is true that charge cards have reduced the use of personal Account Receivable transactions at main-stream retailers such as Target, K-Mart, Wal-Mart, etc., but within the business selling “on account” is still very common.  Less common, but still in existence, is Notes Receivable.  The credit terms are usually longer that the thirty days covered by Account Receivable accounts.