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Accounts receivable management of group companies

Author: SongHongWeiˇˇWangXiaoJun From: www.yourpaper.net Posted: 2007-11-19 01:31:36 Read:
Group companies have other decisive voting shares of the Company, and to exercise control or engaged in the operation and management of the company, the company is also known as the parent company. Receivables from selling goods, products, services, and other purchases of units should be or accept the amount received by the labor unit, its main purpose is to provide a credit for the buyer with insufficient funds. At present, many enterprises in China caused due to accounts receivable high cash flow problems, a serious impact on business development. Especially Corporation, its sales of large-scale, complex organizational structure, long chain management, internal control is difficult. Huge amounts of receivables of the Group companies is quite complicated, full of trading, it is due to the weak credit management, the credit decision-making caused by the failure; From a management perspective, it is due to the negligence of the level of accounts receivable held cause; from the internal control, which is caused because the whole process is invalid control. Mature market economy has been verified, the implementation of credit management is an effective way to guard against the risk of receivables.

Group accounts receivable management long-term, effective, standardized means of the implementation of credit management

Nature of the modern market economy is an economy based on credit, the credit relations or credit a way that constitutes the main form of social and economic operation. If the enterprise does not have a sound and effective credit management system and policies, and the lack of sufficient market competitiveness. China's credit management is still in a weak link, but with the in-depth development of the market economy and China's accession to the WTO, economic operation will gradually move closer to the regulated market economy. Therefore, China's large and medium-sized enterprises should plan ahead, take the lead in the credit management mode. Generally speaking, credit management is the business in order to enhance the ability of credit control credit risk in the transaction and the implementation of a set of operational programs, policies, and established for this purpose a series of organizational system. It is a cross-cutting management of marketing, financial management, and information management.

(A) Group Credit Management

Group Company intends to implement two credit management mode. The parent can set up a separate credit management department, as the company's middle management agencies whose function is to plan, organize, direct, coordinate, oversee the Group's credit management. Its subsidiaries, branches, and other related businesses (hereinafter collectively referred to as sub-units) should set up a separate credit management agencies The principal function of the sub-units of credit management is to do a good job in the the parent credit management department under the guidance of customer information management, customer credit analysis, accounts receivable management, chase debt management, and strengthen the credit decision on this basis, its main purpose is to increase sales, accelerate cash flow, reduce loans and improve customer relations.

(B) sub-unit of credit management content

1 customer risk management

(1) The customer information collected

Comprehensive and accurate customer information based on their credit rating and credit limit approval is the basis of the business credit management. Customer information, including the following areas: 1) Basic information. Registration records of customers and related information; 2) history of the development. Including the historical process of significant change events Events in the near future; 3) organization and management. Including the customer's shareholder structure, organizational structure and key management personnel background; 4) operating conditions. Main business of customers, major suppliers and payment methods, capacity production and brand, sales and receivables, business premises and personnel; 5) financial position. Including the financial statements and key financial ratio analysis; 6) credit history. Including customers in the bank, the public records of the court, the transaction payment history and peer review; 7) internal evaluation. It is the confluence of a comprehensive evaluation of enterprise sales staff and any other relevant authority in the long-term contact with customers; 8) field trips. Field trips to get the information and impressions on customers; 9) Industry Analysis. Products including industry overview, product demand, competitive environment, management, payment practices, bad debt, profit levels, solvency, capital structure, return on capital. Whereby sub-units to build customer information database.

Of credit channels are not sound enough, the sub-units can be obtained from the following customer information: 1) the customer required documentation or proof for review; 2) the customer site visits; 3) information exchange and communication with customers counterparts ; 4) collection of information through the mass media; 5) by the departments in charge of industry, industry associations and other relevant departments of the government to collect information; 6) engagement of advisory bodies, the assessment of the company customer credit investigation.

(2) Ratings, select the client

Sub-unit of credit management institutions summarize customer information, collation, analysis, archiving, and credit analysis model of the customer's credit rating. Commonly used credit evaluation model has two kinds:

The first method is judged according to '5 C 'system, namely: quality (Character) refers to the creditworthiness of the customer, that is the possibility to meet their debt obligations, and evaluation of customer credit is often regarded as the primary factor; capacity (Capacity), refers to the solvency of the customer, that is, the quantity and quality of its current assets to current liabilities ratio; capital (Capital), refers to the customer's financial strength and financial condition; secured (Collateral), customer non-payment of money or the ability to make payments can be used as collateral assets; conditions (Conditions), the economic environment may affect the customer the ability to pay. Sub-units can opt to reflect the customer's solvency representative financial indicators and reflect the customer's own characteristics, industry characteristics of the non-financial quantitative indicators, set different credit evaluation criteria of how good or bad for the customer's credit rating scores .

The second method is credit scoring model law, credit score financial variables, and produce a determination of the Company's credit score or index, based on four financial variables on the basis of scores is:

S = W1X1 W2X2 W3 X3 W4 X4 = 2 X1-0.3X2 0.1 X3 0.6 X4 [1]

Where: X1 = net working capital / Sales * 100%; X2 = liabilities / assets * 100%; X3 = assets / sales revenue * 100%; X4 = net profit / sales revenue * 100%; W coefficient or the right to number; S consolidated credit score.

The above two methods can be more than the limit customer credit Sort, and then grant the credit line. Also, combined with the company's overall strategy of the Group, competitive market conditions, inventory levels, working capital position, the continuity of customer orders within a certain period, the order amount, repayment, suitable adjustment of customer credit ratings;

Sub-unit of credit policy

Credit policy refers to the credit management department in a specific market environment, trade-offs and receivables related benefits and costs of handling the accounts receivable and collection policies and formulated a series of policies. Credit policy, including credit period, cash discount, credit standards, credit limit policy.

(1) Credit period. The credit period is the the longest payment time limit for sub-units as specified by the customer; (2) cash discount. The cash discount is a sub-unit to encourage customers to pay in advance and the deductions made in commodity prices. Cash discount in conjunction with the credit period taken together and consider the benefits and costs of discount stack up; (3) credit standards. Credit standards are minimum standards sub-units to customer credit, the credit requirements of customers; (4) credit line. The credit line is in credit conditions, credit limits granted to customers. It includes overall credit limit of the customer base and sent to a specific customer's credit limit to two lines of credit to some extent represents the strength of the enterprise, to reflect its financial capacity and the opportunity cost borne by the customer and the risk of bad debts affordability. Sub-unit of credit management departments should be in accordance with its credit policy review of the customer's credit application to determine the customer's credit limit in order to control the size of its credit sales to customers due to excessive credit affect the customer's ability to pay.

Second, the company held to determine the level of accounts receivable

Negligence on the amount of accounts receivable occupied will cause it to slowly accumulated, and finally the formation of a heavy burden. Level of receivables held by the group of companies including its overall holdings held by the sub-unit level.

(A) Group companies to determine the level of overall receivables held

Group company's overall level of accounts receivable held to take three methods to determine:

1 from top to bottom. Established in this way in the financial management of the centralized model. First be adjusted according to the strategic objectives of the Group companies, the level of accounts receivable held by
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