Receivable Management Essay

The company will come to know about the existing flaws in the system. The recommendations would help the company to overcome the same. It will also help the company to know which portal is generating more revenue, which position and many other things which generate grab major part of the revenue. [pic] Management Of Accounts Receivable Management of receivables is a process under which decisions to maximize returns on the investment blocked in them are taken. Thus, the main objective of management receivable is to maximize the returns on investment in receivables & to minimize risk of bad debts etc. Because investment in receivables affects liquidity and profitability, it is, therefore, significant to maintain proper level of receivables. Accounts receivable represent sales that have not yet been collected as cash. It explains that merchandise or services in exchange for a customer’s promise to pay at a certain time in the future. Accounts receivables of a firm are created on both the side of the productive system. On one side of this system, the firm may make advance payments to the suppliers of the raw material to ensure timely supply, when the supplier holds the monopolistic position. On the other side of the productive system, accounts receivable are created by a firm when it sells its output on credit. These are termed as sundry debtors. Sundry Debtors constitute nearly 60% of the Accounts Receivables. Four Aspects Of Management Of Sundry Debtors: 1. Credit Policy needs to be determined. This involves a trade off between the profit on additional sales that arise due to credit being extended on the one hand and the cost of carrying those debtors and the bad debts losses on the other hand.