Research On Revenue Recognition And Financial Impact Of Sellers Providing Credit Support Sales Model

In recent years,with the rapid development and progress of the economy,credit has also become a very important factor in the process of commodity trading.Due to the high price and long cycle of the commodities in the construction machinery industry and the increasingly competitive market environment,construction machinery mannufacturers has been changing theirs' sells mode.At the beginning,they sells the products in full payments.Then in installment sales,in this sales mode,they directly bears the credit risk of the customers.And now,they support their customers obtaining enough money to buy their products with their own credit.This sales mode increased construction machinery companies' competitive advantage,and seized market share.However,in the current practice,there is also some voice of questioning the seller's credit support.The problems are mainly focused on the method and quality of confirmation of revenues under this model,and the subsequent financial impact and potential risks arising from the current confirmation methods.This article selects the construction machinery industry as the research scope,and focuses on the industry giant Sany as the case study object.At the begining,This article uses current status of the research as a theoretical basis,and then analyzes the industry as a whole,presenting an overall situation of the seller's credit support sales model application in the construction machinery industry,and the revenue recognition policies and methods of the listed companies in this industry under the sales model.After then making a specific analysis of the case companies,the specific case analysis will first describe the application status and revenue confirmation methods of Sany Heavy Industry's sales model,and then combine the criteria to evaluate the Sany Heavy Industry's revenue confirmation method,and then quantify the financial data,Analyze and verify the risks and other financial implications of Sany Heavy Industry's one-time full recognition of revenue under this sales model.Finally,three conclusions are drawn: 1.The income recognition method for construction machinery companies is generally radical and does not fully consider the potential risk factors;2.The seller provides credit support sales model promotes short-term business performance,but the quality of real operating income is worrying;3.Bad debts Risk and cash flow risk are negative effects of the seller's credit support sales model.At the end of the article,based on the previous industry analysis and case study,at the levels of criterion and engineering machinery companies,several suggestions were made for regulatory agencies and construction machinery companies.