Research On The Accounts Receivable Management Of FGM Company

Companies have maintained a few types of sales in the current global market-the cash sales,the credit sales,the installment sales etc.The competition pressure and the industry practice have forced companies to take the credit sales approach for selling products and services,leading to receivables of companies.Companies have to take the costs for holding receivables as part of their capital is taken by the customers,but it is necessary for companies to keep receivables in order to maintain or expand market shares in the market with fierce competition,along with more conveniences for customers and lower inventory cost.Therefore,receivables have been one of the most valuable tangible assets in the corporate balance sheet.A review of the Fortune 500 companies shows that 75% of the top 100 companies have receivables ranked among the top 3 of their tangible assets,indicating that the liquidity of receivables should be next only to the cash and the working capital projects with portfolio investment.As a result,many corporate managers are tasked with effectively managing receivables.Over the past ten years since FGM's foundation in China,its business has been continuously growing with increasingly higher sales revenues and receivables,but the long collection period of receivables led to the low efficiency of fund utilization.With FGM as an example,this paper probes into the management issues of receivables,including the size and the aging,to figure out the fundamental causes and propose suggestions for enhancing the management.Overall,the goal is to help FGM effectively control the management of receivables,optimize the management level,improve the efficiency of fund utilization,reduce the losses of bad loans,avert the financial risks,and pinpoint the viable solutions and approaches for the company.