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On the listed company quality management of accounts receivable

Author: Anonymous From: www.yourpaper.net Posted: 2009-04-18 12:13:43 Read:
Author: Zhang Zijian accounted Hui Lian Xie continued friends [Abstract] With the development of market economy and the prevalence of credit transactions, the company gradually increased the amount of accounts receivable, how to effectively manage accounts receivable highly concerned about the listed companies. Through the collation of receivables disclosed in the 2007 Annual Report of the listed companies in Jiangxi Province, the generally low quality of the receivables, such as aging aging, such as the lack of provision for bad debts. In order to improve the quality of the receivables, the listed company may take reasonable credit policy, tracking aging and other measures in a timely manner.
[Key words] accounts receivable; provision for bad debts; quality management

In the highly competitive commercial companies usually take credit policy in order to attract customers, expand sales; credit led to an increase in accounts receivable, also carries risks for the company. If a large number of receivables does not recover in time, or even bad debts, affected the normal production and operation of the company. Receivables are the money of a long-term occupation of company funds, to extend the company's operating cycle, increasing the company's operating costs, which can seriously affect its production capacity. In recent years, the listed company's accounts receivable increasing large amount of accounts receivable precipitation every year, no doubt exacerbated the deterioration of the quality of its assets, therefore, to strengthen the quality of the receivables management is the top priority of the company.

First, the quality of listed companies accounts receivable status quo

I organize accounts receivable data disclosed in the 2007 annual financial report of listed companies in Jiangxi Province, found that the quality of listed companies receivables is generally low.
(A) large amount of accounts receivable
Jiangxi Province, 16 listed companies to disclose the receivables, the higher the proportion of the amount of current assets and the main business income. Table 1 in the nine listed companies receivables accounted for the ratio of current assets is higher than 20% (5 of listed companies this proportion had reached more than 30%); nine listed companies receivables accounted for the main business income higher than 10% (Hongdu Aviation as high as 48%). These two indicators are fully part of the profitability of listed companies is less than ideal quality. So long, the lack of sustainable development and the expansion of production scale cash flow.
(B) The aging of accounts receivable aging
The key to determine the quality of the receivables is their mobility. Overdue receivables generated usually due to insolvency or malicious default, the longer overdue, the greater the possibility of the formation of bad debts. From the annual reports of 16 listed companies in Jiangxi Province, found that only 16 listed companies Seong water industry is not more than 1 year accounts receivable; 11 listed companies there are more than 5 years of accounts receivable, and the river Pharmaceutical receivables more than five years as high as 60.28% (Table 2).

(C) provision for bad debts of less than
Accordance with international accounting standards, the companies generally 100% provision for bad debts of more than three years of accounts receivable, we can see from Table 3, are much lower than the proportion of listed companies provision for bad debts, only to be more than 5 years accounts receivable before provision for 100%. China's accounting standards on the percentage of provision is not mandatory requirements, resulting in some listed companies through the provision for bad debts ratio of earnings management. Improve the proportion of bad debt provision, often resulting in the the listed companies emergent loss or a substantial decline in earnings.


(D) Related party receivables excessive
With related party transactions, capital of listed companies explicitly or implicitly the flow of substantial shareholder or its related parties. The one hand, the huge cash outflow of listed companies, resulting in a serious shortage of funds, the Company's ability to continue as a going concern and solvency dropped significantly; On the other hand, when the defaulting party to settle their debts in exchange for the poor quality of assets, not only can not with the company to any turn for the better, but to make the increase in the proportion of non-performing assets of the company, adding to the burden of the development of the company. Of which, Changjiushenghua This company is a related party receivables total accounts receivable ratio of 27.5%, while the Changhe shares is as high as 63.48%. I found the outstanding units of the listed companies in the data analysis of the accounts receivable of the other listed companies in Jiangxi Province, its parent or subsidiary of the same parent company under the Brothers and associates.

Second, the quality of accounts receivable management connotation

In the fierce market competition, the company by relying on credit to promote sales and enhance competitiveness, while trying to avoid the flow of funds to the company due to the presence of the accounts receivable difficulties, bad debt losses and other defects, how to handle and resolve this contradiction, is the Company's accounts receivable management goals.
Accounts receivable management is to develop scientific and rational accounts receivable credit policy, credit policy to increase sales profitability and the cost of this policy is expected to be borne by trade-off in control receivables minimum cost and risk under the premise, to maximize the size of the company's sales, reduce and avoid credit risk and maximize profits.
Accounts receivable management aims to expand sales at the same time, to minimize the opportunity cost of the management of accounts receivable, bad debt losses and management costs, maximize investment income receivables. The lowest accounts receivable management goal is to accelerate cash flow, the higher the accounts receivable turnover ratio, average collection period is the shorter, faster turnover. The accelerated turnover means that as long as with fewer receivables will be able to achieve more sales, or to achieve more sales with the same amount of receivables, which enhances the ability of the company to make a profit .
Receivables as part of the current assets, with emphasis to improve their liquidity, prompting the receivables to be recovered as soon as possible to achieve a quick and full conversion of accounts receivable to cash. Company receivables management focus to develop reasonable credit policy is based on the company's actual operating conditions and customer credit-worthiness, which is an important part of the financial management of the company, the company must be developed for the purpose of accounts receivable management strategy.

Third, to enhance the quality of accounts receivable management measures

Jiangxi Province listed companies accounts receivable analysis, we can see that the accounts receivable of the listed companies there are many problems. Listed companies should strengthen the quality of the receivables management, timely collection of receivables, in order to accelerate the company's funding cycle, improve the efficiency of utilization of funds, enabling the company to maximize efficiency.
(A) to develop a reasonable credit policy
The soundness and strict implementation of the company's credit policy is to improve the the receivables investment income premise. The use of credit policies to control receivables at an appropriate level, and effectively reduce the incidence of bad debts, bad debts, the company capital recovery and turnaround is in a good track. The credit policy is mainly to determine the credit terms and the development of credit standards. Credit conditions and accept customer credit orders for payment requirements, including credit during the discount period and cash discount rate. Credit standards means the customer should have to obtain trade credit conditions. If the credit standards are too high, it will lose some customers, is not conducive to market competition; credit standard is too low, it will lead to increased risk of bad debt losses and collection fees. Listed company requires a case-by-case basis to establish a reasonable credit policy, credit policy changes lead to marginal revenue equals marginal cost.
(B) regulate the behavior of related party transactions
The largest shareholder of listed companies can take advantage of its dominant position in the listed company related party transactions, affect the normal conduct of related transactions, unreasonably high prices of its products or poor quality of assets sold or replacement to the listed company, in exchange for listed companies cash or good assets; or a non-normal cheap to buy from listed companies or assets, do not even pay the price for listed companies accounts receivable, increasing funds are long-term occupation, directly and seriously affected the normal production and operation of listed companies, to the detriment of small and medium-sized the legitimate rights and interests of the shareholders. Therefore, when listed companies in transactions with related parties, the principle of fair premise of the amount or proportion of related party transactions, the amount of outstanding items, or the appropriate proportions, pricing policy and other matters should be disclosed in a timely manner, or listed companies assume corresponding responsibility information disclosure is not timely or untrue.
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