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Multi-National Corporation accounts receivable management in China

Author: QuWanJun From: www.yourpaper.net Posted: 2007-11-19 03:00:23 Read:
With China's accession to the WTO, China will further open the market, there will be more world-class Multi-National Corporation to China development.To the enterprise, of course people want more by cash way, but because of the intense commercial competition, forcing many enterprises to adopt the way of selling on credit, and the account receivable arise.According to the data, some Multi-National Corporation management level higher, accounts receivable liquidity ratio as high as 70%, such as Japan Hino automobile company in 1978 accounted for 71% of accounts receivable.In addition to product quality, price, service, advertising, credit is a kind of effective method of promotion, but it will also bring some cost to the enterprise, but also face the risk of loss of bad debts.In order to seek rapid development in China, the Multi-National Corporation should actively adapt to the Chinese market environment, using appropriate methods to strengthen the management of accounts receivable.

One, the management of accounts receivable for the establishment of the system of

The internal management of accounts receivable management mainly depends on the company.In the external environment is not mature credit system, enterprises should establish their own credit system in the interior according to its own characteristics, fully grasp the customer information, review, evaluation, contract, delivery, check collection, and a series of management activities.

(a) financial planning department to set up an independent, perfect risk management system.The general enterprises usually appointed marketing department or financial department for customer credit management.The problem is: the marketing department is part of the company profit center, in order to enhance the profit, the market of easy credit is not good company into the sales target; financial department is the accounting department, financial department to reduce the scope of customer, lead to the opposite result.The ideal approach is to set up an independent financial planning department, the customer's credit management.For Multi-National Corporation, has a considerable scale, facing the Chinese state-owned enterprises, private enterprises, joint ventures, other Multi-National Corporation and other economic nature of the customer, it is necessary to establish credit management department is independent, to overcome the defects of market department and financial department management.

(two) the establishment of customer information files.The establishment of customer information files mainly rely on the computer network, is used to evaluate customer information: including customer quality, business reputation, management style and business history; customer capital, capital operation especially the floating capital turnover; customer business nature, history, business scale, marketing ability; customer economic benefits, assets, liabilities ratio.Access to information mainly through direct investigation and indirect investigation in two ways.Direct investigation refers to the marketing staff in everyday business activities in direct contact with customers, a way through the face-to-face negotiation, inquiry, observation, combined with the financial sector and financial planning department actually recover overdue accounts receivable collection, and access to credit data.Indirect investigation refers to the relevant information to the customer company financial statements and bank, the finance and taxation departments, consumer associations, industry and commerce administration departments of preserved as the basis, and one way to obtain credit information through processing.In the audit of the business is relatively concentrated, in which several accounting firm to provide audit services, or accounting consulting services for the vast majority of large and medium-sized company, could be considered by the firm to help companies develop the credit system.Customer credit files of the best quarterly revision.

(three) the correct assessment of customer credit.Method for assessing customer credit commonly used is the 5C method, namely customer quality, capacity, capital, collateral and conditions.In addition, a number of judgment analysis method also can be used, it utilizes multinomial index to reflect the enterprise's debt paying ability, construct a multivariate function relationship, in order to clear the data reflect the customer's credit quality.For example, hydraulic equipment companies in 1986 to 100 customers quick history data rate, benefit and interest ratio, debt ratio and business life, build the following formula:

Y (credit scoring) = 3.5 กม benefit and interest rate 10 * quick ratio 25 * 1.3 * business debt ratio of

Credit score less than 40, indicates that the credit risk is big; the average risk was 40 ~ 50; above 50 indicates less risk.The correct evaluation of the customer information, help to decide whether to accept the customer's credit requirements; identify new customer credit; adjust the existing customer credit; determined for different customer credit conditions and settlement; the formulation of overdue accounts receivable recovery scheme.

Two, the daily management of accounts receivable and

(a) accounts receivable monitoring.Evaluation of the quality of accounts receivable is the main risk to see the faces of bad debt losses.Three methods of estimating bad tradition: the percentage of accounts receivable balance method, sales income of the percentage of balance and aging analysis.Accounts receivable in the future the recoverable amount depending on whether the customer's payment ability and reputation, affected by the payment and credit amount.The occurrence of bad debts and the balance of accounts receivable or sales revenue balance and not directly related, so can not be the first two methods effectively to monitor accounts receivable.Aging analysis method than the former two methods progress, it takes into account the probability of bad debt losses occurred increased with the time, but it has not been the important customer payment ability and reputation into account.So it is with the aging analysis market preferred diagram method, customer credit evaluation and credit amount of three combined to accounts receivable monitoring (Figure).

In the figure above, A said the accounts receivable although larger proportion, but the customer credit good, aging is short, so good quality; B represents the accounts receivable credit generally acceptable, aging, and thus the quality of secondary; although C age longer, but because the customer credit is better, and better quality of D customers; credit is bad, although aging is short, its possibility of bad debt losses, and therefore need to monitor; E customer credit bad old long, poor quality, there will not be paid back, need to focus on monitoring.

(two) the overdue account receivable.Now, many Multi-National Corporation have the use of special accounts receivable management agencies to strengthen the collection of accounts receivable.As Bell Al Carter of the Limited by Share Ltd in four sub company merges with the established financial planning department of the seven large areas of customer accounts receivable check, inspection and collection.Collection work should follow the following procedures:

1 will be overdue accounts receivable classification.Recover overdue receivables requires a considerable amount of manpower and material resources, the manpower resource constraints, the Multi-National Corporation often should give priority to the easy to recover the arrears.Aging is small, customer credit is better, the easier it will be to recover overdue debts.The company should be based on the age of size and other companies that important indicators of the accounts receivable for classification.For different kinds of accounts receivable balance requires a lot of manpower and resources, collection costs, possible loss of bad debts may affect the size and good relations with customers and other factors, the implementation of programmes to choose lower cost.

2 effective implementation of collection.Short of overdue accounts receivable, shall notify the email to customers a polite, not too much trouble, so as not to lose the customer.To the late slightly longer accounts receivable, can be worded politely write collection.On the long overdue accounts receivable, frequent collection, available phone even sent field reminder.On the difficult should be entrusted to a professional company to recover accounts receivable.When the above procedure is invalid, may request the relevant departments or appeal to the court of arbitration.

Accounts receivable skills 3.Reasons for late payment customers are mainly two categories: insolvency and default.The deliberate arrears, the company should use various means, recover the tough measures.On insolvency situation in-depth analysis.If customers are experiencing temporary cash flow difficulties, the company should not be used to recover the tough measures, can change the credit terms to extend the repayment period to help tide over the difficulties, so that more account, establish good relationship with customer.If the customer is in serious trouble, no hope of change, the Multi-National Corporation must take immediate legal or other property preservation measures, the maximum compensation claims.This kind of debt from the discovery of the start should be taken to recover the tough measures, must not because of their previous relationship and miss the opportunity of receivables.

Three, the use of accounts receivable financing

As a flow of enterprise assets, accounts receivable and notes receivable can also raise money, solve the problem of shortage of funds.There are three general forms:
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