Accounts receivable are any assets that are owed to another company. Receivables can be found on a company’s balance sheet and the time it takes to cover the amount owed on these receivables varies. If company B sends a product to company A and is waiting for company A to send them cash, company B’s accounts receivable have increased because its cash has not be sent.
Fashion gurus such as Marc Jacobs and Calvin Klein hire a number of accounting experts to help maintain their accounting statements. At the same time, it would come as no surprise that these brands ensure that their accounts receivable are covered in an efficient manner. Say for instance Marc Jacobs delivers sunglasses frames to a smaller retail store called Bobs. Bobs is responsible for paying Marc Jacobs for those frames and lets imagine that Bobs has 2 weeks to cover this payment. At this stage, Marc Jacobs accounts receivable have increased. If at any point Bobs hints at the fact that they will not be able to cover their payment and in turn decrease Marc Jacobs’ receivables, I would not be surprised if the company decided not to do business with Bobs in the future. Companies as large as these must receive cash in a timely manner because of their short term obligations.