Trade receivables

Money customers owe for goods already delivered. It is the balance-sheet trace of the accrual principle, and it is where revenue goes to wait.

The garment exporter with ₹4,800 crore of revenue and ₹640 crore of receivables is waiting about 49 days for its money.

Receivables growing faster than sales is the single most reliable early warning in accounts. It can mean a genuine shift to larger customers with more bargaining power, or a push of stock into distributors at the end of a quarter, or customers who cannot pay. All three matter, and the ageing schedule distinguishes them.

The ageing schedule is now presented in fixed buckets in Indian filings, which makes the comparison across years and across companies straightforward. What you want is the share of the balance sitting beyond six months. A company whose total receivables grew 20% while the over-six-month bucket grew 60% has not gained customers with more bargaining power; it has stopped collecting from somebody. The disclosure also separates amounts due from related parties and from directors, and a large or growing figure there is a governance question rather than a working capital one.

Look for the provision for doubtful debts alongside. A company whose receivables ageing is deteriorating while the provision stays flat is telling you two contradictory things at once, and one of them is wrong.