Onhowtostrengthenthemanagementofaccountsreceivable_10624.doc

1、On how to strengthen the management of accounts receivablePaper Keywords Credit Policy Receivables ManagementAbstract accounts receivable is the inevitable result of thedevelopment of commercial credit in the market economy, commercial creditscale, strengthen the management of accounts receivable be

2、comeincreasingly important. Accounts receivable management goal is to notaffect sales on the basis of accounts receivable to minimize investmentcost. To strengthen the management of accounts receivable, the main shouldbe prepared to credit policies, daily management of accounts receivable,collection

3、 work in three areas.One to develop reasonable and effective credit policyThe effect of accounts receivable credit good or bad, depends on the enterprises of the credit policy. Credit policy, refers to weigh the benefits, costs and risks of the investment accounts receivableFunding level of the prin

4、ciples provided for planning and control. Generally include: the credit period, credit standards, credit terms with three aspects.(1) credit during the period. Credit period is to allow corporate customers to buy cash on delivery from the time between. The determination of the credit period, primari

5、ly an analysis of the credit period to changethe current income and cost. To extend the credit period, sales will increase, resulting in beneficial effects; In the meantime, accounts receivable, collection costs and bad debt losses to increase, resulting in adverse effects. Present were larger than

6、the latter, we can extend the credit period, or should not be extended. If you shorten the credit period, the situation is opposite.(B) credit standards. Credit standards is the business agreed to give the customer the credit required by minimum standards. Of credit standards will cause sales, the t

7、otal accounts receivable, bad debts and costs of changes in the risk of loss, business development of credit standards, we must consider the different credit standards for benefits and cost. If the enterprise after the relaxation of credit standards andthe increase in sales of more profitable than t

8、he resulting increase in bad debt losses and the opportunity cost of the receivables, then the company should relax credit standards; if companies reduce the tightening of credit standards by the sales profit is less than The resulting decrease in accounts receivable bad debt losses and opportunity

9、costs, then the companies should be tightened credit standards.To develop an appropriate credit standards, we mainly do the following two tasks:1. Deciding the level of the best investment accounts receivable. The accounts receivable investment costs including opportunity costs,management costs, sho

10、rtage costs. The opportunity cost of funds due to reduction in accounts receivable occupation potential revenue; management costs occurred in the daily management of accounts receivable, such as salary costs, office expenses, revenue costs, bad debt losses and other expenditure. Shortage costs are r

11、eputable companies can not offer credit to suffer the potential loss of sales. The best level of investment accounts receivable refers to the total investment cost of the most-hour occupation of the level of accounts receivable, and its ability to determine the key lies in enterprises more accuratel

12、y predict the level of investment accounts receivable under a different opportunity costs, management costs, shortage cost.2. According to customer credit status, the accounts receivable total amount of investment allocated to the corporate customers to determine their credit limit.(1) to collect cu

13、stomers credit information. Generally proceedfrom the following aspects; customers to access and analyze financial statements over the years, especially recently; advice to the credit rating agencies; proof of Bank clients, as well as banks and otherfinancial institutions have published a number of

14、corporate credit grade; to provide credit to customers and other business survey; on their own accumulation of information. There are many channels as sources ofinformation, companies need to consider access to these cost-effectiveness of the information itself.(2) to analyze customer credit status.

15、 Generally referring to foreign 5C for credit analysis, judge whether the enterprise customercredit standards. 5C that the quality that customers are willing tomeet its payment obligations to the possibility of moral factors in thecredit evaluation is the most important factor. capacity and operatin

16、gconditions. capital, refers to an enterprises financial position andfinancial strength that customers may repay debts background.collateral that customers refuse to pay the money or unable to pay the money that can be used as collateral assets. This is controversial I do not know exact details or c

17、redit status of customers is particularly important. conditions, refers to the general economic situation in theimpact of the enterprise, or an area of some special circumstances of the impact on customer ability to pay. Factors affecting customer credit status is complex and changeable, and must be

18、 quantitative analysis and qualitative analysis to combine.(C) credit terms. Credit terms refer to enterprises requiring customers to pay the credit section of the conditions, including thecredit limit, discounts, terms and cash discounts. Discount period is provided for the customer can enjoy a dis

19、count of cash payment time; cash discount is to encourage customers to discount period for early payment discounts. Under normal circumstances, provide more favorable credit terms to increase sales, but it can also bring an additional burden, such as accounts receivable will increase the opportunity

20、 cost of bad debt losses, cash discounts costs must be carefully weighed.Second, the daily management of accounts receivableDay to day management, including accounts receivable management, and the total management of individual accounts. In the right clients to develop credit line, you can not wait

21、until non-payment or credit is toolarge when the scale of measures of process control should be carried out, so that the accounts receivable turnover in the normal state.(A) a single customer management1. Make a record, understand the timeliness of customer payments. Basic record keeping, including

22、business-to-customers credit terms, the date of the establishment of credit relationships, the customer paymenttime. The amount currently owed, and customer credit rating change.2. Check whether the customers break credit limit. Enterprise customers a credit for each business should check the record

23、s of more than the credit limit and pay attention to check whether the total amount of debt owed by customers exceeded your credit limit.3. Grasp the customer credit period has expired the debt, and closely monitor the client has matured debts of the dynamic changes in order to take timely measures

24、to connect with customers, remind them of their payment as soon as possible.(B) the total amount of managementBusy credit business, it is impossible for all customers to be managed separately, it should focus on the total amount of control.1. Analysis of accounts receivable turnover and average coll

25、ection period to see if the liquidity is in the normal level. Enterprises can be the targets were actually higher than the past, and planning ratio, compared with the same industry, so as to accounts receivable management appraisal successes and failures and to rectify the credit terms. Reposted els

26、ewhere in the paper for free download http:/2. Withhold state inspection. Observation of the percentage of non-payment of accounts receivable has been that the bad debt loss rate, in order to determine whether the corporate credit policy should bechanged. If the actual bad debt loss rate significant

27、ly lower than the expected loss rate of bad debt, companies must look at the credit standards are too strict; On the contrary, they should look at whether it is too loose, thus amending the credit standards.3. Prepare aging analysis table. Check the actual occupancy of the accounts receivable days,

28、business-to-recovery supervision of accounts receivable aging analysis through the preparation of the table.Accordingly, to understand: (a) the number of arrears is still the credit period, although these arrears is normal, but the ability to recover after the expiry, but also that time in order to

29、ascertain, there is still need for timely monitoring; (2) the number of arrears over the credit period,the amount exceeds the length of the respective percentages, the estimated number of models will be due in arrears for too long may be bad. If mostof the receivables exceeded the deadline, companie

30、s should check theircredit policy.Third, management of accounts receivable after(A) to determine a reasonable collection procedures. Accounts receivable collection procedures generally are: notification letters, telephone, telegraph, facsimile collection; send people to come dun; legal action, in ta

31、king legal action, should consider the cost-effective. Caseof the following circumstances need not be prosecuted: (1) The court costs of litigation exceed the amount of the debt claim, (2) Customer cash collateral may be written off the debt, (3) customers debt is not, it hasa wide range of social r

32、elations, prosecution may be the enterprise movement has been compromised, or even lead to injury, (4) Even if successful, recover the receivable may be extremely limited.(B) to determine a reasonable debt collection methods. Customer accounts receivable owed the reason can be summarized as two cate

33、gories: facilities due to insolvency and deliberate.1. For debt collection inability to compensate the village to conduct a specific analysis:(1) If the customer is indeed temporary difficulties, through the efforts can make a comeback, an enterprise should help customers tide overtheir difficulties in order to recover more receivables. The generalpractice is to conduct accounts receivable debt restructuring: toaccept fair market value of outstanding household debt to less than theamount of non-monetary assets cover; alteration of debts in the form oflong-term receivables to determine a rea