Accounts receivable and management

What are accounts receivable?

Accounts receivable refers to the money that an enterprise should collect from customers who buy goods or accept services for reasons such as selling products, commodities and providing services, as well as the transportation and miscellaneous fees paid on its behalf. It is a creditor's right asset formed by enterprise's credit sale and an important part of enterprise's current assets.

The emergence of accounts receivable management

Accounts receivable refers to the money that the company should collect from the buyer, the unit or individual who accepts the labor service for selling goods and providing labor services. The direct cause of accounts receivable is credit sale. Although most companies prefer cash sales to credit sales, in the face of competition, they have to adopt credit policies and provide credit services to customers in order to stabilize sales channels, expand commodity sales, open up and occupy markets, reduce commodity storage costs and management costs, and increase income. Although the company adopts credit sales, it can bring the above benefits to the company, but it also has to pay a certain price and bring risks to the company. If the customer defaults on the payment, it is more and more difficult to recover the accounts receivable, or even impossible to recover them. Therefore, accounts receivable management is the top priority of enterprise management.

The role of accounts receivable

The role of accounts receivable is mainly reflected in the production and operation of enterprises. There are mainly the following two aspects:

1. Expand sales

In the increasingly fierce market competition, selling on credit is an important way to promote sales. In fact, enterprises provide customers with two kinds of transactions: selling products to customers within a limited period of time and providing funds to customers. Credit sale is very beneficial to customers, so customers usually choose to buy on credit. Credit sale has obvious promotion effect, which is more important for enterprises to sell new products and open up new markets.

Reduce inventory

Enterprises holding finished goods inventory should pay management fees, storage fees, insurance fees and other additional expenses; On the contrary, if the enterprise holds accounts receivable, it does not need the above fees. Therefore, when an enterprise has a large inventory of finished products, it can generally use more favorable credit conditions to sell on credit, convert the inventory into accounts receivable, reduce the inventory of finished products and save related expenses.

Current situation of accounts receivable management

Accounts receivable management has the following difficulties:

1, the accounts receivable of purchasing enterprises are too loose, the most direct impact is the operation of enterprise funds, and the worst result is that accounts receivable cannot be recovered, resulting in a large number of bad debts and dormant accounts in enterprises.

2, accounts receivable are too dead, and some enterprises will go to extremes not to give money or deliver goods, which will affect the sales of enterprises and cause some customers to lose.

The goal of accounts receivable management

For an enterprise, the existence of accounts receivable is the unity of production and sales. On the one hand, enterprises want to use it to promote sales, expand sales revenue and enhance competitiveness, and at the same time, they want to avoid the disadvantages such as cash flow difficulties and bad debt losses caused by the existence of accounts receivable. How to deal with and solve this contradiction is the goal of enterprise accounts receivable management.

The goal of accounts receivable management is to formulate a scientific and reasonable credit policy for accounts receivable, and to balance the sales profit increased by this credit policy with the expected cost of adopting this policy. This credit policy can only be implemented if the increased sales profit exceeds the increased cost of using this policy. At the same time, accounts receivable management also includes forecasting and judging the future sales prospects and market conditions of enterprises, as well as investigating the security of accounts receivable. If the enterprise has a good sales prospect and high security of accounts receivable, it can further relax the credit collection policy, expand the amount of credit sales and obtain greater profits. On the contrary, it should tighten the credit policy accordingly, or appropriately adjust the credit degree of different customers, so as to ensure that enterprises can get the maximum benefits and minimize possible losses.

The focus of enterprise accounts receivable management is to formulate a reasonable credit policy according to the actual operation of the enterprise and the reputation of customers. This is an important part of enterprise financial management, and it is also a policy and strategy that enterprises must formulate reasonably in order to achieve the purpose of accounts receivable management.

Disadvantages of poor management of accounts receivable

1, which reduces the efficiency of capital use and the benefit of enterprises. Because of the inconsistency between enterprise logistics and capital flow, goods were issued and sales invoices were issued, but the payment could not be recovered synchronously, and sales had been established. This kind of sales income without payment will inevitably lead to the profit and loss of sales business without cash inflow. Sales tax should be paid and income tax should be paid in advance during the year. If accounts receivable caused by inter-annual sales revenue are involved, the current assets of the enterprise can be generated to advance the annual dividends of shareholders. Due to the above-mentioned pursuit of superficial benefits, enterprises pay taxes in advance and pay dividends to shareholders, which takes up a lot of working capital. Over time, it will inevitably affect the capital turnover of enterprises, which will lead to the actual situation of enterprise operation being covered up, affecting the production plan and sales plan of enterprises and failing to achieve the established benefit goals.

2. Exaggerated the operating results of the enterprise. Because the accounting basis implemented by Chinese enterprises is accrual basis (receivable and payable basis), credit sales in the current period are included in the current income. Therefore, the increase of enterprise's book profit does not mean that cash inflow can be realized as scheduled. The accounting system requires enterprises to make provision for bad debts according to the percentage of accounts receivable balance, and the provision rate for bad debts is generally 3%-5% (except for special enterprises). If the actual bad debt loss exceeds the bad debt reserve, it will bring great losses to the enterprise. Therefore, the existence of a large number of enterprise accounts receivable has inflated the sales revenue on the books, exaggerated the operating results of enterprises to a certain extent, and increased the risk cost of enterprises.

3, accelerated the cash outflow of enterprises. Although selling on credit can make enterprises generate more profits, it does not really increase the cash inflow of enterprises. On the contrary, enterprises have to pay all kinds of taxes and fees with limited liquidity, which accelerates the cash outflow of enterprises, mainly as follows:

(1) Enterprise turnover tax expenditure. Accounts receivable bring sales revenue, but they don't actually receive cash. Turnover tax is calculated on the basis of sales, and enterprises must pay it in cash on time. Turnover taxes paid by enterprises, such as value-added tax, business tax, consumption tax, resource tax and urban construction tax, will inevitably increase with the increase of sales revenue.

(2) Income tax expenditure. Accounts receivable generate profits, but they are not realized in cash. Income tax must be paid in cash on time.

(3) The same problem exists in the distribution of cash profits. In addition, the management cost of accounts receivable and the recovery cost of accounts receivable will accelerate the cash outflow of enterprises.

4. It has an impact on the business cycle of the enterprise. The business cycle is the period from obtaining inventory to selling inventory and recovering cash. The length of the business cycle depends on the inventory turnover days and the average payment cycle, and the business cycle is the sum of the two. It can be seen that the existence of unreasonable accounts receivable prolongs the business cycle of enterprises, affects the capital circulation of enterprises, causes a large amount of working capital to precipitate in non-production links, causes cash shortage of enterprises, affects the payment of wages and the purchase of raw materials, and seriously affects the normal production and operation of enterprises.

5. It increases the error probability in the process of accounts receivable management and brings additional losses to the enterprise. Faced with a large number of accounts receivable, it is difficult for enterprises to find accounting errors in time, and it is also impossible to understand the dynamic situation of accounts receivable and the details of the other enterprise in time, resulting in unclear responsibilities. Scattered and lost accounts receivable, contracts, commitments, approval procedures and other information may make the accounts receivable that have occurred in the enterprise unable to be recovered on time. Only a part of the total accounts receivable can be recovered, and those that can be recovered by legal means cannot be recovered because of incomplete information, until the asset loss of the enterprise unit is finally formed.

Feasible ways to strengthen the management of accounts receivable

To manage accounts receivable well, the most important thing is to formulate a scientific and reasonable credit policy for accounts receivable. After the policy is formulated, enterprises should strengthen the implementation of the credit policy of accounts receivable from the following three aspects.

1. Do a good job in customer credit investigation.

Before selling on credit, enterprises conduct credit surveys on customers in order to solve several problems: whether they can trade goods with customers; How much to do and how much credit to control at a time; What kind of transaction methods, payment terms and safeguard measures are adopted?

Generally speaking, a customer's credit level usually depends on five aspects, namely, the customer's morality, ability, capital, guarantee and conditions, which is also commonly known as the "5C" system. The credit information of these five aspects can be obtained through the following channels:

Financial statements. This is one of the most ideal information sources for credit analysis, but we should pay attention to the authenticity of the statements, and it is best to obtain the recently audited financial statements. By calculating some ratios, especially analyzing the ratio between the liquidity of assets and the ability to pay on time, we can evaluate the ability, capital and conditions of enterprises, which is helpful to improve the decision-making effect of accounts receivable investment.

Credit rating report or check with relevant national institutions. Banks, other financial institutions or social media regularly publish some information about customers' credit rating to the public. This information can be collected from relevant newspapers and periodicals, and can also be consulted by the industrial and commercial departments, enterprise management departments, tax departments and credit departments of the banks where customers are located to understand the company's capital registration, production and operation history, current situation and trends, sales and profitability, tax payment, etc. And check whether there is any bad history to evaluate the company's moral character.

Business communication information. Every customer of an enterprise will have multiple suppliers at the same time, so the enterprise can exchange credit information through suppliers related to the same customer, such as the length of contact period, the credit conditions provided, and the timely payment of goods by customers.

After comprehensive credit analysis of the above information, enterprises can judge the credit status of customers and establish customer files. In addition to the basic customer information such as name, telephone number and address, it is also necessary to record the customer's financial status, financial strength and historical records, so as to determine the corresponding credit rating for each customer. However, it should be noted that the credit rating is not static, and it is best to conduct a comprehensive audit once a year to keep in line with the latest changes of customers. For customers with different credit ratings, enterprises should adopt different sales strategies and settlement methods when selling. Generally speaking, enterprises often attach cash discount conditions while stipulating the credit period, that is, if customers pay within the specified period, they can enjoy a certain discount, which is nothing more than hoping that customers can pay for the goods as soon as possible, but we should pay attention to it, that is, it is appropriate to provide discounts with income greater than the cost of cash discount.

2. Strengthen the daily management of accounts receivable.

In the daily management of accounts receivable, some aspects of the company are not detailed enough, such as the compilation of aging analysis table. Specifically, we can do a good job in the daily management of accounts receivable from the following aspects: make basic records and understand the timely payment of customers (including subsidiaries). The basic records include the credit provided by the enterprise to the customer, the date of establishing the credit relationship, the payment time of the customer, the amount still owed and the change of the customer's credit rating. Only by mastering this information can enterprises take corresponding countermeasures in time.

Check whether the customer exceeds the credit limit. Enterprises should check whether each credit sale business provided by customers has a record of exceeding the credit period, and pay attention to check whether the total debt owed by customers exceeds the credit limit.

Grasp the debts of customers who have passed the credit period and closely monitor the increase and decrease of debts of customers who have expired, so as to take timely measures to contact customers and remind them to pay as soon as possible.

Analyze the turnover rate and average payment cycle of accounts receivable to see if the liquidity is at a normal level. Enterprises can use this index to evaluate the achievements and shortcomings in accounts receivable management, and correct the credit status according to the previous reality, current plan and the same industry.

Enterprises should follow the principle of conservatism, estimate the possibility of bad debt losses in advance, and actively establish a preparation system to make up for bad debt losses.

And investigate the situation of non-payment, investigate the percentage of accounts receivable refused to pay, that is, the bad debt reserve ratio, in order to decide whether the credit policy of enterprises should be changed. If the actual bad debt reserve ratio is greater than or lower than the expected bad debt reserve ratio, the enterprise must see whether the credit standard is too strict or too loose, so as to modify the credit standard.

Prepare the aging analysis table and check the actual days of accounts receivable. Enterprises can monitor their recovery by compiling an aging analysis table. Based on this, we can know how many debts are still in the credit period and should be supervised in time. How many debts have exceeded the credit period? Calculate the percentage of overdue funds and estimate how many debts will cause bad debts. If most of them are overdue, enterprises should check their credit policies.

3. Strengthen the post-event management of accounts receivable.

For overdue accounts receivable, it is necessary to carry out aging analysis and step up collection, because it is the most taboo not to recover accounts in time. According to the statistics of American Collectors Association, the success rate of account recovery is 57.8% for more than half a year, 26.6% for more than 1 year, and only 13.6% for more than two years. Collection management includes the following two parts:

Determine a reasonable collection procedure. The procedures for collection of accounts are generally: letter notification, telegram, telephone and fax collection, sending someone to interview, and resorting to law. Before taking legal action, the principle of cost-effectiveness should be considered, and prosecution may not be initiated under the following circumstances: the litigation cost exceeds the creditor's right; Discounted customer collateral can write off debts; The customer's debt is not large, and the prosecution may damage the operation of the enterprise; The possibility of recovering accounts after prosecution is limited.

Determine a reasonable way to collect debts. If the customer does encounter temporary difficulties, he can make a comeback through hard work, and the enterprise can help him tide over the difficulties in order to recover the accounts. The general practice is to reorganize the creditor's rights of accounts receivable: compensate the debtor with non-monetary assets below the debt amount at the market price; Change the form of debt to "long-term receivables", determine a reasonable interest rate, and agree with customers on an installment repayment plan; Modify the debt conditions, extend the repayment period, and even reduce the principal to encourage repayment; Driven by the same economic interests, transforming creditor's rights into "long-term investment" for customers is helpful to start loss-making enterprises and achieve the purpose of recovering funds. If the customer has reached the bankruptcy limit, he should bring a lawsuit to the court in time in order to get some compensation in bankruptcy liquidation. In view of the intentional breach of contract in debt collection, the available methods are: reasonable method, fatigue method, provocation method, carrot and stick method, etc.

Measures and countermeasures of accounts receivable management

Strengthen the daily management of accounts receivable

1. Set accounts receivable subsidiary ledger

In order to strengthen the management of accounts receivable, enterprises set up subsidiary ledger according to the names of credit customers on the basis of general ledger, and record the transactions with credit customers in detail and in time.

The role of accounting is to provide information related to decision-making, and the subsidiary ledger of accounts receivable plays this role in the management of accounts receivable. However, whether the decision is correct or not will also depend on the characteristics of information such as relevance, reliability, timeliness and integrity. Therefore, for the setting and registration of accounts receivable subsidiary ledger, we should usually pay attention to the following points:

(1) All credit sales should be recorded in the subsidiary ledger of relevant customers correctly, timely and in detail, reflecting the credit status of each customer at any time, and special sales journals can be set up to reflect the credit sales as needed;

(2) The whole process of credit sale business should be handled by division of labor, such as registering subsidiary ledger, filling in the credit sale bill of the credit sale customer, delivering or mailing the bill to the credit sale customer, and handling the cash of the customer's income. , and appoint someone to be responsible;

(3) The subsidiary ledger should be checked with the general ledger regularly.

The factors that affect the recovery amount of accounts receivable are usually:

(1) Cash discount in sales discount;

(2) sales returns and discounts;

(3) Who will bear the sales freight;

(4) Bad debt factors. The information of these four aspects will be recorded in detail in the accounts receivable subsidiary ledger and sales journal. Mastering these situations is not only conducive to maintaining the integrity of accounts receivable, but also conducive to the control of production and operation, improving product quality and improving the living environment of enterprises. For example, the second factor, we can know the product quality of the enterprise, the consumer preference of the customer and the customer's preference for the product quality, packaging, appearance and function of the enterprise through a lot of information about returns and discounts. The third factor is objective, and the first and fourth factors will be elaborated in the following management methods.

2. Set up a special credit sales and credit reporting department.

The amount and time of accounts receivable depend on the credit of customers. Bad debts will cause losses, and a long payment cycle will weaken the liquidity of accounts receivable. Therefore, enterprises should set up credit sales and credit investigation departments to investigate customers' credit, and obtain information from credit investigation agencies that rate enterprises' credit, so as to determine the credit status and payment ability of customers who require credit purchase. The functions of the credit sales and credit reporting departments of enterprises in the management of accounts receivable are:

(1) to rate the credit status of customers;

(2) approve the object and scale of credit sale. Without approval, other departments and personnel of the enterprise generally have no right to agree to sell on credit;

(3) Responsible for collecting credit accounts in time and accelerating capital turnover. Generally speaking, the time limit for collection of accounts should not be too long, because a long legal time limit may mean the abandonment of creditor's rights.

The credit rating of customers by credit sales and credit investigation departments should be obtained from subsidiary ledger and sales diary in addition to the credit rating agencies of enterprises. An important way to analyze these two books is to use aging analysis, because the balance of accounts receivable increases with the increase of aging, and the prospect of final collection becomes dim, which is also an important reason why sales discounts are widely used. The table that classifies the customer balance of accounts receivable by age is called aging method. In addition to estimating the possible proportion of bad debts, the aging analysis table has another advantage, that is, it enables managers to make special judgments on the credit of each customer.

3. Implement strict bad debt write-off system.

Accounts receivable exist because of credit sales. Therefore, there is a risk that accounts receivable will not be collected from the day they are generated, that is, the risk of bad debts. It can be said that bad debts are the inevitable result of credit sales. For the whole credit sale, we can understand individual bad debts as credit sale expenses. In order to reduce the loss of the enterprise, according to the matching principle, bad debts should be matched with the income and deducted from the income, so as to list the real assets of the enterprise, and at the same time, the owner's equity and income can not be exaggerated, which is also the requirement of the prudence principle. There are two ways for enterprises to deal with bad debts: direct write-off method and allowance method. Comparatively speaking, allowance method is more in line with the principle of proportion and prudence, so it is favored. Allowance methods are divided into percentage method of credit sale, percentage method of accounts receivable balance and aging analysis. Each method has its own advantages and disadvantages, and different people have different preferences for these methods. The implementation of strict bad debt write-off system is not different due to the methods adopted, mainly including the following three aspects:

(1) Accurately judge whether it is a bad debt, and at least two people should write off the bad debt. It is not easy to judge bad debts and their amount in preparation, and it is possible to prevent fraud by handling them by more than two people. For example, a salesman puts the recovered accounts receivable into his pocket and declares bad debts to his superiors.

(2) Write-off of bad debts should be clearly recorded in the accounts receivable subsidiary ledger, and the written-off bad debts should still be specially managed. As long as the debtor is not dead or bankrupt, as long as there is a glimmer of hope, we can't give up. At the same time, it also left information for future inspection and review.

(3) For bad debts that have been written off and recovered again, strict accounting treatment should be carried out. First, accounting entries should be made to reproduce accounts receivable, and then accounting treatment should be made for the collection. Doing so helps managers grasp the information: customers' desire to rebuild a good image.

Implement strict internal audit and internal control system.

Whether the amount and time limit of accounts receivable recovery are really related to the status of enterprise liquidity, the decision-making of enterprise production, the image of credit customers and the resistance of internal control to embezzlement and misappropriation of enterprise funds. Therefore, in order to maintain the safe operation of funds, strict internal audit and internal control systems should be implemented for accounts receivable, including:

1. Reliable personnel and clear responsibilities. To control success, the most important factor is the human factor. Unqualified and dishonest employees will weaken the function of a system. It is a basic job to recruit, train, motivate and manage employees. Individuals must be given rights, responsibilities and obligations according to their abilities, interests, experiences and reliability. The responsibility is to trace any action to the end as much as possible, so that the result is linked to the individual. Fixing the responsibility can also have a psychological impact on employees, prompting them to be cautious and pay attention to efficiency.

2. Separation of duties and job replacement. Separation of responsibilities not only helps to ensure the accurate compilation of data, but also limits the opportunities for two or more people to cheat in cooperation, which is an extremely important but often overlooked factor. Changing jobs can bring two benefits: one is to ensure that at least two employees know to do the same job, so that when one of them can't go to work for some reason, the other can make up for it in time; Secondly, the rotation system can prevent the occurrence of fraud, because when the substitute takes over the work, it is easy to find the improper behavior of the predecessor.

3 bad debt verification certificate is complete, there must be a complete program. Bad debt write-off should have evidence, and permanent bad debt write-off should have objective media reports, such as debtor's death or bankruptcy. The expected long-term irrecoverable bad debts should be specially registered after write-off, and a special person should still be appointed to be responsible for collection, and regular inspection should be conducted to prevent corruption.

4. Authority to supervise credit sales. Credit sales and credit investigation departments have the right to decide the object and quantity of credit sales, but the decision must be based on the analysis of credit data, and their power belongs to the whole department, and the rights of individuals cannot override the collective.

Rational use of sales discount

The adoption of commercial credit produces accounts receivable, which is a creditor's right owned by enterprises and must be recovered after a certain period of time. As a current asset, it has contingent characteristics. Therefore, when selling, we will not hesitate to choose cash for sale. However, in the previous discussion, we also said that enterprises will also have to accept credit sales. Therefore, in order to encourage customers to pay in time or as soon as possible, we choose the means of sales discount.

Sales discount will indeed reduce the risk of accounts receivable, but we should also pay attention to the object (customer), the way of use and the discount range, otherwise the sales discount will not be close to what we want. For example, ordinary customers generally do not use cash discounts, and credit sales use commercial discounts as little as possible.

Make full use of accounts receivable for financing.

Generally speaking, holding accounts receivable will not increase in value, and if the time value of money is considered, its holding will cause losses. Therefore, it will be an important and meaningful thing to make full use of accounts receivable to increase its value and bring benefits to enterprises.

Accounts receivable can be financed by borrowing or selling, and can be used for circular production. Usually, the sales of accounts receivable require high credit rating of customers, and the possibility of bad debts of such funds is very small. Debits and credits of accounts receivable will form contingent liabilities of enterprises. Nevertheless, these two methods can enable enterprises to obtain working capital in advance and gain profits. However, when using these two methods for financing, we must pay attention to the principle that the income is greater than the cost, that is, the income increased by using funds in advance is greater than the cost of using funds in advance, otherwise neither method can be used.

Accurate use of legal weapons

The economic activities of enterprises are bound by law, and at the same time, the law will also protect the legitimate economic activities of enterprises. Therefore, maintaining the integrity of accounts receivable is inseparable from the effective weapon of law. First of all, the sales contract should be standardized. The sales department should work with the financial department, the production department and the legal department to formulate the sales contract, improve the contract content, clarify the responsibilities and obligations of all parties, especially the relevant clauses of breach of contract, and avoid disputes in the future. For customers with low credit rating, we can adopt the methods of guaranteed sales and no credit sales. Secondly, after regular reconciliation, legally binding written documents should be obtained to avoid verbal commitments. Finally, for customers caught in debt crisis, if they have no development potential, they should start the creditor bankruptcy application procedure in time to reduce losses; If there is potential for development, we should make reasonable and effective use of debt restructuring and other means to recover our own losses.

For example, 1996, a company sells two trains of railway freight cars to a company in Wuhai, Inner Mongolia, totaling 100, with a value of140,000 yuan. At that time, the progress of installment payment was clearly stipulated in the contract, and it was agreed: "Before the payment is paid in full, the property right belongs to the company." By the end of 1999, Wuhai Company still owed the company more than 5 million yuan in payment. Wuhai Company was sued for other economic disputes, and the Inner Mongolia Higher People's Court seized the two railway wagons. After learning this situation, the company quickly wrote to the Inner Mongolia Higher People's Court to explain the situation. And formally raised an objection to its seizure ruling as the owner of the property. Later, I went to contact people many times and argued. After many efforts, in the second half of 2000, the Inner Mongolia Higher People's Court finally revoked the seizure ruling of two self-owned vehicles and lifted the seizure of self-owned vehicles. The company seized the opportunity and negotiated with Wuhai Company in time to recover the ownership and management right of ***50 vehicles 1 train at a reasonable price, thus approving the payment of 5 million yuan. According to the actual situation at that time, it was quickly leased to another company in Inner Mongolia for operation. Up to now, the accumulated rent has been recovered by more than 3 million yuan, and the lease contract is still being fulfilled. This successful case fully shows that if there is a clear property right agreement in the contract, the realization of creditor's rights will be more reliable, and the products can be recycled according to the specific situation, thus creating new value, and sometimes even obtaining higher income than simply selling products.

In addition, factoring business is a comprehensive service business integrating financing, settlement, account management and risk guarantee. For sales enterprises, it can also save enterprises from the trouble of accounts receivable management and improve their competitiveness.

The Influence of Accounts Receivable Management on Enterprises

1, the positive impact of accounts receivable on the production and operation of enterprises

In the fierce business competition, in order to obtain profits, enterprises must sell goods and obtain sales income. The amount of income is the basis for testing operating results, especially in a market economy. Whether there are operating results determines the fate of the enterprise. Therefore, enterprises can only make profits if they have income, and enterprises will take various ways to promote sales in order to obtain sales income. Credit sale is one of the important means, which attracts a large number of customers and expands sales.

2, the negative impact of accounts receivable on the production and operation of enterprises.

The increase of accounts receivable not only brings income to enterprises, but also brings risks. If the accounts receivable can't be recovered in time, bad debt losses will directly reduce the profits of enterprises and affect the production and operation of enterprises. Accounts receivable is a capital investment of an enterprise. Long-term occupation of enterprise funds has slowed down the capital turnover of enterprises, increased the operating costs of enterprises and seriously affected the reproduction capacity of enterprises.

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