应收账款管理外文文献翻译

文献出处：Kontu? E. MANAGEMENT OF ACCOUNTS RECEIVABLE IN A COMPANY[J]. Ekonomska misao i praksa, 2013 (1): 21-38.

原文

MANAGEMENT OF ACCOUNTS RECEIVABLE

IN A COMPANY

UDK / UDC: 657.422:658.155

JEL klasifikacija / JEL classification: G32, D29, M41 Prethodno priop?enje / Preliminary communication Primljeno / Received: 8. listopada 2012. / October 8, 2012

Prihva?eno za tisak / Accepted for publishing: 10. lipnja 2013. / June 10, 2013

1. INTRODUCTION

Accounts receivable is the money owed to a company as a result of having sold its products to customers on credit. The primary determinants of the company's investment in accounts receivable are the industry, the level of total sales along with the company's credit and the collection policies.

Accounts receivable management includes establishing a credit and collections policy.

Credit policy consists of four variables: credit period, discounts given for early payment, credit standards and collection policy. The three primary issues in accounts receivable management are to whom credit should be extended, the terms of the credit

and the procedure that should be used to collect the money.

The major decision regarding accounts receivable is the determination of the amount and terms of credit to extend to customers. The total amount of accounts receivable outstanding at any given time is determined by two factors: the volume of credit sales and the average length of time between sales and collections. The credit terms offered have a direct bearing on the associated costs and revenue to be generated from receivables. If credit terms are tight, there will be less of an investment in accounts receivable and fewer bad debt losses, but there will also be lower sales and reduced profits.

We hypothesize that by applying scientifically-based accounts receivable management and by establishing a credit policy that results in the highest net earnings, companies can earn a satisfactory profit as well as a return on investment.

The purpose of this study is to determine ways of finding an optimal accounts receivable level along with making optimum use of different credit policies in order to achieve a maximum return at an acceptable level of risk. In striving to fill in the gaps relating to net savings from changes in credit policy, the study makes its own contribution to research and thereby to managers by giving them general recommendation. With the aim of completing these gaps, the study will investigate accounts receivables, their management and explore costs and benefits from changes in credit policy as well as net profitability.

When a company is considering changes in its credit policy in order to improve its income, incremental profitability must be compared with the cost of discount and

the opportunity cost associated with higher investment in accounts receivable.

The outcome represents a new mathematical model for calculating net savings from changes in credit policy and with this model a company can consider different credit policies as well as changes in credit policy in order to improve its income and profitability.

2. LITERATURE REVIEW

2.1. Accounts receivable management

Accounts receivable represents a sizable percentage of most firms' assets. Investments in accounts receivable, particularly for manufacturing companies, represent a significant part of short-term financial management. Firms typically sell goods and services on both cash and a credit basis. Firms would rather sell for cash than on credit, but competitive pressures force most firms to offer credit. The extension of trade credit leads to the establishment of accounts receivable. Receivables represent credit sales that have not been collected. As the customers pay these accounts, the firm receives the cash associated with the original sale. If the customer does not pay an account, a bad debt loss is incurred1.

When a credit sale is made, the following events occur: inventories are reduced by the cost of goods sold, accounts receivable are increased by the sales price, and the difference is profit, which is added to retained earnings. If the sale is for cash, then the cash from the sale has actually been received by the firm, but if the sale is on credit, the firm will not receive the cash from the sale unless and until the account is

collected. Carrying receivable has both direct and indirect costs, but it also has an important benefit-increased sales.

According to Chambers and Lacey there are three primary issues in the management of accounts receivable: to whom to extend credit, what the terms of the credit should be, and what procedure should be used to collect the money. Extending credit should be based upon a comparison of costs and benefits. The analysis must build in uncertainty because we are uncertain of future payment, and we will handle this by computing the expected costs and expected benefits through payment probabilities. The potential cost of extending credit is that the customer will not pay. Although there is a temptation to compute this cost as the full price of the product, it is almost always more appropriate to use the actual cost of the product. The potential benefit of extending credit is not just the hope for profit on the one transaction; rather, it is the potential value of the customer for a long-term relationship.

The decision of how much credit to offer must be made when the customer initially requests credit and when the customer requests additional credit. The fundamental principle that guides financial decisions can be used: marginal benefit versus marginal cost. The marginal cost is the additional potential lost costs of the product. The costs of past uncollected sales are sunk costs and should not be included as a marginal costs. The marginal benefits are the potential sales and interest revenues – including the potential to recover past sales that remain uncollected.

Once the decision to grant credit has been made, the firm must establish the terms of the credit. Credit terms are often separated into two parts: the credit period

and the credit discount.

Collection of accounts receivable is an important process for a corporation and requires a well-designed and well-implemented policy. One technique is the factoring of accounts receivables. In a typical factoring arrangement, one firm will sell their accounts receivable outright to another firm for an agreed-upon price. There ia usually no recourse in such transactions, such that the buyer (also known as the factor) takes the loss if the purchaser of the goods does not ultimately pay for them.

Another technique to expedite the receipt of accounts receivable is to utilize lock boxes. Lock boxes are payment collection locations spread geographically so as to reduce the amount of time required for checks mailed to the firm to be deposited and cleared. The lock boxes are typically post office box addresses from which deposits go directly to a bank on the day of receipt. The reduction of mailing time and check clearing time for the banks can produce significant savings when large sums of money are involved.

Payments of accounts receivable should be closely monitored to detect potential problems such as would be indicated by slow payments. Following up on slow-paying customers is an important function of the credit department. Procedures should be carefully developed and consistently implemented.

The major decision regarding accounts receivable is the determination of the amount and terms of credit to extend to customers. The total amount of accounts receivable is determined by two factors: the volume of credit sales and the average length of time between sales and collections. The credit terms offered have a direct

bearing on the associated costs and revenue to be generated from receivables.

In evaluating a potential customer’s ability to pay, consideration should be given to the firm’s integrity, financial soundness, collateral to be pledged, and current economic conditions. A customer’s credit soundness may be evaluated through quantitative techniques such as regression analysis. Bad debt losses can be estimated reliably when a company sells to many customers and when its credit policies have not changed for a long period of time. In managing accounts receivable, the following procedures are recommended:

? establish a credit policy

? establish a policy concerning billing ? establish a policy concerning collection.

The establishment of a credit policy can include the following activities: ? A detailed review of a potential customer’s soundness should be made prior to extending credit. Procedures such as a careful review of the customer’s financial statements and credit rating, as well as a review of financial service reports are common.

? As customer financial health changes, credit limit should be revised.

? Marketing factors must be noted since an excessively restricted credit policy will lead to lost sales.

? The policy is financially appropriate when the return on the additional sales plus the lowering in inventory costs is greater than the incremental cost associated with the additional investment in accounts receivable.

The following procedures are recommended in establishing a policy concerning billing:

? Customer statements should be sent within 1 day subsequent to the close of the period.

? Large sales should be billed immediately.

? Customers should be invoiced for goods when the order is processed rather than when it is shipped.

? Billing for services should be done on an interim basis or immediately prior to the actual services. The billing process will be more uniform if cycle billing is employed.

? The use of seasonal dating’s should be considered.

In establishing a policy concerning collection the following procedures should be used:

? Accounts receivable should be aged in order to identify delinquent and high-risk customers. The aging should be compared to industry norms.

? Collection efforts should be undertaken at the very first sign of customer financial unsoundness6.

2.2. Managing the credit policy

The success or failure of a business depends primarily on the demand for its products.

The major determinants of demand are sales prices, product quality, advertising,

and the company’s credit policy. The financial manager is responsible for administering the company’s credit policy. Receivables management begins with the credit policy. Credit policy consists of four major components: credit standards, credit terms, the credit limit and collection procedures.

Credit standards refer to the required financial strength of acceptable credit customers.

Based on financial analysis and non financial data, the credit analyst determines whether each credit applicant exceeds the credit standard and thus qualifies for credit. Lower credit standards boost sales, but also increase bad debts. The minimum standards a customer must meet to be extended credit are: character, capital, capacity, conditions and collateral.

The credit period, stipulating how long from the invoice the customer has to pay, and the cash discount together comprise the seller’s credit terms. A company’s credit terms are usually very similar to that of other companies in its industry7.

Discounts given for early payment include the discount percentage and how rapidly payment must be made to qualify for the discount.

If credit is extended, the dollar amount that cumulative credit purchases can reach for a given customer constitutes that customer’s credit limit. The customer periodically pays for credit purchases, freeing up that amount of the credit limit for further orders. The two primary determinants of the amount of a customer’s credit limit are requirements for the supplier’s products and the ability of the customer to pay its debts. The latter factor is based primarily on the customer’s recent payment

record with the seller and others and a review and analysis of the customer’s most recent financial statements8

Detailed statements regarding when and how the company will carry out collection of past-due accounts make up the company’s collection procedures. These policies specify how long the company will wait past the due date to initiate collection efforts, the methods of contact with delinquent customers, and whether and at what point accounts will be referred to an outside collection agency9.

Collection policy is measured by its toughness or laxity in attempting to collect on slow-paying accounts. A tough policy may speed up collections, by it might also anger customers, causing them to take their business elsewhere10

A firm may liberalize its credit policy by extanding full credit to presently limited credit customers or to non-credit customers. Full credit should be given only if net profitability occurs. A financial manager has to compare the earnings on sales obtained to the added cost of the receivables. The additional earnings represent the contribution margin on the incremental sales because fixed costs are constant. The additional costs on the additional receivables result from the greater number of bad debts and the opportunity cost of tying up funds in receivables for a longer time period.

If a firm considers offering credit to customers with a higher-than-normal risk rating, the profitability on additional sales generated must be compared with the amount of additional bad debts expected, higher investing and collection costs, and the opportunity cost of tying up funds in receivables for a longer period of time. When

idle capacity exists, the additional profitability represents the incremental contribution margin (sales less variable costs) since fixed costs remain the same.

译文

公司应收账款的管理

埃莉奥诺拉 克罗地亚 预算和财务部门经理

1.引言

应收账款是指由于企业将其产品销售给客户而应向购买单位收取的款项。公司应收账款投资的主要决定因素是整个行业、总销售额水平以及公司的信用和收账政策。

应收账款管理包括建立一个信用和收账政策。

信用政策包括四个变量：信用期，提前付款给折扣，信贷标准和收账政策。应收账款管理的三个主要问题是谁应该扩展信贷，信贷的方式和程序应该用于收集资金。

应收账款的重大决策即决定客户贷款的数量和条件。应收账款总额未在任何给定的时间偿还主要取决于两个因素：信用销售的数量，销售与收账间的平均时间间隔。提供的信用证条款对相关成本和应收账款产生的收入有着直接影响。如果信用证条款严格，就会有更少的应收账款投资在和坏账损失，但也会降低销售减少利润。

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