Receivables Management Company is impossible without a well thought-out credit policy - established set of rules that govern the granting of commercial loans, and order repayment of receivables.Approval of the order to the credit policy adopted by the company each year, in order to be able to clarify the goals and objectives adopted standards, approaches and conditions.
Goals
If you want to receivables management companies to be effective, its goal should be the following:
- increase the efficiency of investment in the current and long-term receivables;
- increase sales rather profit from it;
- increase return on investment.
Besides formalizing the goals of the enterprise receivables management involves identifying problems, the solution of which will be achieved target values (for example, a successful appearance on new markets).Each task should be formulated as an opportunity to measure the amount of resources and a realistic timetable for its implementation.
methods
usually distinguish the following methods of receivables management:
- conservative;
- moderate;
- aggressive.
That how the accounts receivable management companies, has a direct impact on its profitability, determines what will be the credit policy, the granting of discounts in relation to the ineffective buyers, how the process will be accelerated repayment of debts and reduce bad debt.As this depends on the conditions of sale, which provide guaranteed receipt of working capital.Doubtful or bad debts, as a rule, include not paid on term accounts.This means that each unit of money for goods shipped to the deferred payment, and not paid on time, it does not return a certain percentage.
decision
To make it possible to produce high-quality analysis and management of accounts receivable, are required to keep:
- account of orders;
- account billing;
- timely to establish the characteristics of the resulting receivable;
- calculate the amount of lost profits in connection with investment funds (the agreement on the deferment of payment of shipped goods or services).
management in this case is related to the following types of reserves time:
- invoicing;
- mailing.
time required for account statements, equals the number of days that pass from the time of sending goods to the buyer prior to the date of expulsion account.Time of sending mail is the number of days after which the invoice will be received by the buyer.
But the main key point is the installation of certain terms of the loan, which have a significant impact on the final and forecast sales volumes and, consequently, the receipt of funds.For example, if the distribution company will provide a longer loan term, this will lead to increased sales.But it must be borne in mind that the loan period has a direct impact on the cost side.That is, we have a dual situation.On the one hand while tightening the timing of receivables from the sales of the enterprise will fall, but significantly lower losses associated with non-return funds.On the other hand, milder conditions will increase sales, but the company will lose the money already in two directions - the emergence of bad debts and profits.It should also take into account the seasonality and sales.
