A credit card company heeds borrowers' default risk and establishes sound procedures to limit credit losses. The business also sets proper operating standards in its record-keeping units, ensuring that personnel record credit card receivables in accordance with norms such as generally accepted accounting principles and U.S. Securities and Exchange Commission directives.


Credit card receivables are amounts a credit card company expects to recover from customers at a given point, such as the end of a month or quarter. Receivables are a typical staple in the financial sector, and industry players -- other than banks -- also might have receivables on their books. This happens because card-issuing companies often sell their receivables to other organizations, generally for liquidity management purposes.

The Mechanics

A credit card company goes through a hodgepodge of procedures and processes before recording and reporting receivables in its books. The business generally screens applicants to weed individuals with spotty credit histories out of the lending process, extending offers only to those with reasonable or acceptable credit scores. The organization reviews applicants’ financial statements, employment records and debt repayment habits. After checking an applicant’s creditworthiness, a lender extends a credit line, or credit limit, that aligns with the applicant’s financial profile. The creditor records receivables only when the borrower uses the card to purchase goods and services, because untapped funds are not a liability to the debtor.

Tools and Technology

To record customer receivables, a credit card institution relies on various tools, most of which give prominence to technology. The tools of the trade include database management system software; mainframe computers; credit adjudication and lending management system software, also known as CALMS; and document management software. Other tools include customer relationship management applications, analytical or scientific software, enterprise resource planning software, and accounts receivable and payable management applications.

Financial Accounting and Reporting

For a credit card company, customer receivables are short-term assets, because the business generally expects customers to remit amounts owed within one year. If it takes clients longer to send the cash, the organization classifies the receivables as long-term assets. To record credit card receivables, a corporate bookkeeper debits the customer receivables account and credits the card revenue account. When customers make payments, the bookkeeper debits the cash account and credits the client receivables account, to bring it back to zero. Debiting cash, an asset account, means increasing money in corporate coffers. This is distinct from the banking terminology. Credit card receivables are integral to a corporate balance sheet, also known as a statement of financial condition or statement of financial position.