Final answer:
Accounts Receivable is the mechanism that a company uses to track payments owed by customers. Various strategies and processes can be employed to ensure timely payments, such as setting clear payment terms and conditions and using automated accounting systems.
Step-by-step explanation:
Accounts Receivable is the mechanism that a company uses to track payments owed by customers. To ensure that customers pay on time, companies employ various strategies and processes.
One common strategy is to set clear payment terms and conditions, including deadlines and penalties for late payments. This helps encourage timely payments and provides a framework for tracking and managing accounts receivable.
Companies may also use automated accounting systems or software to track and monitor accounts receivable. These systems generate invoices, track payments, and send reminders to customers about upcoming or overdue payments. By automating these processes, companies can efficiently track accounts receivable and take appropriate actions to ensure timely payments.