The Research Of W Company’s Accounts Receivable Management Based On Factoring Business

Economic development causes intensified business competition, and this makes credit sale an increasingly popular way for companies to increase their sales performance and competitiveness. In order to achieve these purposes, these companies are constantly extending the credit period for their customers, and perform flexible collection policy. This is directly represented by the constantly high holdings of accounts receivables on companies’ side. The increasing of accounts receivables has exceeded the increasing of sales, which makes accounts receivables accounted for a large portion of the companies’ circulating funds. Over time, these companies will facing the problem of lacking fund in production or management. However, with the development of supply chain finance, factorage financing as one of the financing modes in supply chain finance provides a new chance for these companies to reduce the balance and improve the liquidity of accounts receivables. The factoring business in China is developing prosperously, and its business volume has been ranked top all over the world since 2008. The total revenue of domestic factoring business in 2013 was 407.8 billion USD. Currently, banks are the major factors in domestic factoring business industry. The number of domestic enterprises specialized in commercial factoring increased by 271 from 2012 to 2013. It is thus important for companies to seize the opportunity to grow together with China’s factoring business, and how to seize the opportunity is the issue we should focus on. In recent years, W company has earned great sales achievements in China white goods industry. However, it also faces severe problems such as over-low turnover velocity and over-fast increasing of the balance of accounts receivables. Now W company is actively seeking for the opportunity to work with commercial factoring companies so as to solve aforementioned issues.The articles first introduces the basic information of W company’s accounts receivables and its current management situation as well; and then analyzes the reasons why W company acts actively in factoring business. After that, the article summarizes the major difficulties of W company when it is involved in factoring business. Finally, through problem analysis on accounts receivable management of Whirlpool, the article states that W company should take specific measures to improve its accounts receivable management so as to achieve its goals in working on factoring. Based on this, the article provides an evaluation on the design and effects of W company’s accounts receivable management solution; and also provides corresponding improvement suggestions.The article innovatively states that these companies can solve factoring issues through improving accounts receivable management, thus achieving the goals of working on factoring business. Presently, most of the researches done by scholars in this field focus on issues such as:how the factor can control the business risk; the benefits of working on factoring business in terms of accounts receivable management, etc. While in fact, these companies cannot easily achieve goals such as fasten the turnover velocity or reduce the balance of accounts receivables through factoring. This is because factors don’t recognize the quality of their accounts receivables when they submit their accounts-receivables transferring application. Due to this, the article states that improving accounts receivable management is the best way to achieve factoring goals.