Markets · 6 pages · 12 min
Why a sale can be a fiction until it is collected
A recorded sale can sit as a receivable that never becomes cash if the customer does not pay.
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From the opening
A sale is recorded when the firm has performed and expects to be paid, but the cash test is still ahead if the customer buys on credit. Until collection, the revenue can function as a fiction in the cash sense, a story the income statement tells before the bank has confirmed it. The opening covers booking is not depositing, collectibility is a condition, and write-offs unwrite the story.
The rest of the brief — the later sections and the reading notes — opens after Stripe confirms payment.
Inside
- Booking is not depositing
- Collectibility is a condition
- Write-offs unwrite the story
- Operating cash is the check
- Where the idea stops applying
- A distinction worth keeping
Sources
- Revenue recognition collectibility
- Bad debt write-off of sales