Consumer Account Definition
Consumer accounts are a common method used in the business environment when recording financial information. These accounts often include information for individual customers or business clients, depending on the business operations of the company offering consumer accounts. These accounts usually relate to a company's overall accounting system.
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Types
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Individual consumer accounts can be found at banks, brokerage houses, credit card companies or retail stores. These accounts contain the consumer’s personal information and monetary amounts or other assets owned by the consumer. Individual consumer accounts can also contain amounts owed to companies from consumers. Business consumer accounts are similar to individual accounts, although specific account terms may have different requirements for businesses.
Facts
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Consumer accounts allow companies to maintain accurate records on consumer purchases or other transactions. Companies may charge interest on account purchases after a specific amount of time. These accounts also allow companies to calculate overdue amounts based on specific time periods, such as 30, 60 or 90 days. Consumer accounts can also be compiled into single reports showing which customers are overdue and by how many days. This helps companies keep up with cash collections.
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Features
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Business consumer accounts are a form of trade credit. Trade credit allows businesses to purchase goods or services on account without making an immediate cash payment to the seller. Trade credit is a valuable asset because it allows businesses to avoid the lengthy process of obtaining a credit line or traditional bank loan. Businesses often obtain trade credit based on past financial performance and the promise to pay future amounts.
Considerations
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Companies may consider using business or accounting software to manage their consumer accounts. This software allows companies to enter consumer information into a basic system and create standard or custom reports when performing cash-collection functions. Business or accounting software packages can also generate account invoices for mailing to individual consumers. These invoices help remind individuals and businesses about their account information.
Expert Insight
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Collection agencies, factoring companies and other businesses can help companies maintain or generate cash from consumer accounts. Collection agencies usually handle severely delinquent consumer accounts by collecting money from individuals and businesses. Factoring is a process where companies can sell their consumer accounts in good standing and receive a portion of the outstanding dollar amount for this information. Companies use factoring to avoid lengthy cash-collection processes.
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