Study Of Accounts Receivable Management

Accounts receivable (A/R), money owed by customers to another entity in exchange for goods or services that have been delivered or used, but not yet paid for, refers to the right that is relied on business credit and can be calculated in terms of currency. A/R is the claim that sellers acquire through selling goods or providing services, representing fund inflow in the future. Specifically, sellers should collect money and other disbursement from buyers or entities who receive services. A/R is classified as current assets of an enterprise. Strong A/R management should enhance the competitiveness of an enterprise while weak management would directly impact the viability of an enterprise.In the modern business world, transactions relied on business credit are widely adopted and good for economic development. A/R generated from these transactions bear the risk of collection loss. So how to take the advantage of credit to expand business while better manage A/R to avoid or reduce the level of risk. This is a critical issue that all business leaders have to face and tackle.The Paper, by analyzing the case of Conglomerate A, mainly discusses the solutions of A/R management in the aspects of A/R generation, management methods, analysis methods, evaluation, assessment and etc. The purpose is to find a feasible solution of A/R management.Starting from preventing and controlling credit risks and referring to the generally accepted credit mechanisms in foreign enterprises, the author believes that the management of credit risk should be a key component of business management. Establish a comprehensive credit management system and strengthen daily monitoring and controlling; Establish A/R examination, inquiry, collection system; Improve analysis of A/R and by comparing the growth of A/R and that of revenues to analyze the business trend; Evaluate the appropriateness of the credit policy by using vertical comparison of key metrics such as credit rate, collection rate and turnover rate; Use variable analysis to find out the one that is the most important for A/R movement; Find out the relative healthiness in industry through peer analysis. Construct a set of comprehensive assessment systems to evaluate the soundness and effectiveness of A/R policy. Evaluation of A/R management in an enterprise should involve credit management department, sales department and accounting department. Judge the effectiveness of A/R management system through analysis, evaluation and assessment. Establish an effective A/R management mode through continuous improvement.