Identify And Reduce Credit Risk Of Accounts Receivable

With the development and improvement of China's market economy,if enterprises want to expand market share,increase revenue and maximize profits in competitive market.They must conduct appropriate credit policy to maintain existing customers as well as explore new customers.However,due to the immature credit mechanism in the domestic market,the relevant laws and regulations are immature,the qualification of supplier and customers the enterprise is uneven,and the degree of transparency of operation and financial information is low.Therefore,the phenomenon of malicious default and inability to pay often occurs,which increases the credit risk of enterprise receivables while laying hidden dangers for the benign development of enterprises.This paper took the theory of enterprise receivables credit risk as the theoretical basis,adopted the combination of theory and demonstration,and take company H as a sample.According to qualitative and quantitative analysis and literature collection,the paper conducted quantitative analysis and comparison of the main financial indexes of the company.The result is that company H has a higher credit risk compare with other company in the industry,and it should adjust the credit policy,such as reducing the credit limit or change the credit policy in order to avoid credit risk of accounts receivables and reduce economics loss when make a business with company H in the near future.The aim of this paper is to reduce credit risk of accounts receivable.Based on current domestic and foreign advanced credit risk management theory and technical analysis methods,and successful practice on credit management of World fortune 500 company,conduct a series of tactic and strategy on how to reduce the credit risk of accounts receivables.This paper is expected to provide some ideas and methods for enterprises to identify credit risk of receivables in cooperation with suppliers and customers,furthermore,provide some experience and reference methods for Chinese enterprises in the fierce market competition in the future.