This document discusses accounts receivable management. It covers key aspects of managing credit policies like setting credit standards and terms. Extending credit involves assessing customers' willingness and ability to pay through analyzing financial information. Managing receivables, collections, and adopting electronic data interchange can help maximize shareholder value by minimizing bad debts and converting receivables to cash efficiently.
Receivables management by Aakash TiwariAAKASH TIWARI
Receivables, also known as accounts receivable, refer to money owed by customers who have purchased goods or services on credit. Effective receivables management aims to determine credit policies that maximize sales revenue while minimizing costs associated with extending credit, such as collection costs, capital costs, delinquency costs, and default costs. The document discusses key aspects of receivables management including evaluating customer creditworthiness, setting appropriate credit terms, and balancing the costs and benefits of maintaining receivables.
Unit ii marketing-investment_(marketing_finance)[1]shrund
Trade credit arises when a firm sells products or services on credit and does not receive immediate cash payment. This creates accounts receivable that the firm expects to collect in the near future. Maintaining receivables involves costs such as capital costs from blocked financial resources, administrative costs for maintaining records, and collection costs. However, it also provides benefits like increased sales from offering credit and higher profits. Key factors that affect the size of receivables include sales levels, credit policies, terms of trade like credit periods and cash discounts. Firms must carefully manage receivables to limit risks and costs while maximizing benefits.
This document discusses accounts receivable management and credit policies. It defines accounts receivable as sales made on credit. Establishing the right credit policy is important because it affects sales, working capital requirements, and bad debt losses. The document outlines key considerations for determining a credit policy, including credit terms, standards, discounts and collection procedures. It also discusses the trade-offs involved, such as higher sales versus increased costs of financing, collection and potential bad debts. Effective management of accounts receivable and prudent credit policies can help optimize current assets and cash flow.
CashPerform has a unique offering that facilitates efficiency in the cash conversion cycle to recover cash from suppliers, customers and internal efficiences. This translates into Working Capital Optimisation
This document discusses various sources of short-term finance for working capital, including trade creditors, factoring, invoice discounting, bank overdrafts, and counter trade. It focuses on trade creditors, explaining that suppliers providing credit effectively act as bankers by advancing goods before payment. The costs and terms of trade credit vary by industry and company circumstances. Factoring and invoice discounting are also described as alternatives to raise funds from accounts receivable. A number of factors that influence working capital requirements are outlined, such as the nature of business, scale of operations, business cycles, and credit policies.
One of the major issues in the company is the controlling of the collection period and developing optimum credit policy that minimizing the company loses, i.e how to trade off and balance between two costs, the first is carrying costs and the second is the opportunity costs of a particular credit policy. In other wards to define the point where the total credit cost is minimized.
The document discusses key concepts in managing cash and credit for a business. It covers reasons for holding cash, understanding float, cash collection and disbursement techniques, investing idle cash, and analyzing credit policies and receivables. Inventory management techniques like ABC analysis and the economic order quantity model are also summarized. The document provides examples to illustrate calculating float, accelerating cash collections, evaluating changes to credit policies, and determining optimal inventory levels.
The document discusses working capital management and focuses on current assets like cash, accounts receivable, and inventory as well as current liabilities. It covers topics like determining the optimal cash balance, managing accounts receivable through credit policies and collection, different approaches to inventory management, and sources of short-term financing including trade credit. The overall goal is to understand how firms make decisions around current assets and liabilities to balance liquidity and return.
Receivables management by Aakash TiwariAAKASH TIWARI
Receivables, also known as accounts receivable, refer to money owed by customers who have purchased goods or services on credit. Effective receivables management aims to determine credit policies that maximize sales revenue while minimizing costs associated with extending credit, such as collection costs, capital costs, delinquency costs, and default costs. The document discusses key aspects of receivables management including evaluating customer creditworthiness, setting appropriate credit terms, and balancing the costs and benefits of maintaining receivables.
Unit ii marketing-investment_(marketing_finance)[1]shrund
Trade credit arises when a firm sells products or services on credit and does not receive immediate cash payment. This creates accounts receivable that the firm expects to collect in the near future. Maintaining receivables involves costs such as capital costs from blocked financial resources, administrative costs for maintaining records, and collection costs. However, it also provides benefits like increased sales from offering credit and higher profits. Key factors that affect the size of receivables include sales levels, credit policies, terms of trade like credit periods and cash discounts. Firms must carefully manage receivables to limit risks and costs while maximizing benefits.
This document discusses accounts receivable management and credit policies. It defines accounts receivable as sales made on credit. Establishing the right credit policy is important because it affects sales, working capital requirements, and bad debt losses. The document outlines key considerations for determining a credit policy, including credit terms, standards, discounts and collection procedures. It also discusses the trade-offs involved, such as higher sales versus increased costs of financing, collection and potential bad debts. Effective management of accounts receivable and prudent credit policies can help optimize current assets and cash flow.
CashPerform has a unique offering that facilitates efficiency in the cash conversion cycle to recover cash from suppliers, customers and internal efficiences. This translates into Working Capital Optimisation
This document discusses various sources of short-term finance for working capital, including trade creditors, factoring, invoice discounting, bank overdrafts, and counter trade. It focuses on trade creditors, explaining that suppliers providing credit effectively act as bankers by advancing goods before payment. The costs and terms of trade credit vary by industry and company circumstances. Factoring and invoice discounting are also described as alternatives to raise funds from accounts receivable. A number of factors that influence working capital requirements are outlined, such as the nature of business, scale of operations, business cycles, and credit policies.
One of the major issues in the company is the controlling of the collection period and developing optimum credit policy that minimizing the company loses, i.e how to trade off and balance between two costs, the first is carrying costs and the second is the opportunity costs of a particular credit policy. In other wards to define the point where the total credit cost is minimized.
The document discusses key concepts in managing cash and credit for a business. It covers reasons for holding cash, understanding float, cash collection and disbursement techniques, investing idle cash, and analyzing credit policies and receivables. Inventory management techniques like ABC analysis and the economic order quantity model are also summarized. The document provides examples to illustrate calculating float, accelerating cash collections, evaluating changes to credit policies, and determining optimal inventory levels.
The document discusses working capital management and focuses on current assets like cash, accounts receivable, and inventory as well as current liabilities. It covers topics like determining the optimal cash balance, managing accounts receivable through credit policies and collection, different approaches to inventory management, and sources of short-term financing including trade credit. The overall goal is to understand how firms make decisions around current assets and liabilities to balance liquidity and return.
This document discusses the capital structure decision and how to determine the optimal mix of debt and equity financing for a firm. It covers key concepts such as the costs and benefits of debt financing, including tax benefits, added management discipline, bankruptcy costs, agency costs, and loss of flexibility. It also discusses how the weighted average cost of capital is calculated using market values for debt and equity, and how this cost of capital impacts firm valuation. The optimal capital structure balances these various tradeoffs to minimize the WACC and maximize firm value.
This document summarizes a presentation about the Credit Management Association (CMA). CMA is a non-profit association established in 1883 that provides services to credit and financial managers, including professional education, networking opportunities, and credit information services. The presentation discusses CMA's mission to promote effective business credit management and provides tips on topics like credit policy, accounts receivable management, and key performance metrics.
Topic 3 tools techniques of managing of receivablesRAJKAMAL282
The document discusses various techniques for managing accounts receivable, including establishing a credit policy, assessing customer creditworthiness, setting credit limits, invoicing promptly and collecting overdue debts, and monitoring the accounts receivable system. It also describes invoice discounting and factoring as methods to speed up the receipt of funds from accounts receivable, outlining the key services provided by invoice discounters and factors as well as the advantages and disadvantages of each approach.
This document summarizes key aspects of managing receivables, including:
1) Defining receivables as unpaid amounts from credit sales and outlining objectives like collecting accounts receivable.
2) Explaining reasons companies offer credit like promoting sales and factors affecting credit policies like collection costs.
3) Describing steps in determining credit policies including evaluating customers' character, capital, and repayment ability.
4) Outlining collection policies for overdue accounts involving escalating efforts like phone calls, visits, and legal action if needed.
This document discusses strategies for managing a firm's working capital, including accounts receivable, inventory, and cash. It covers establishing credit policies, analyzing customer creditworthiness, collecting accounts receivable, managing inventory levels, and investing idle cash. The goal is to minimize costs associated with carrying accounts receivable, inventory, and cash while maintaining sufficient liquidity to operate the business.
Key person protection is important for business continuity and to protect against financial loss in the event a key person dies or becomes critically ill. It helps minimize business interruption, ensures loan obligations are met, and protects startups and management buyouts that rely heavily on certain skills and relationships.
Accounts receivable and inventory managementluburtusi
This document discusses key aspects of accounts receivable management, credit analysis, and inventory control. It addresses setting credit policies, analyzing credit applicants, managing the billing and collection process, and following up on overdue accounts. It also outlines the five C's model for credit analysis - character, capacity, capital, collateral, and conditions. Finally, it discusses techniques for inventory control like ABC analysis, economic order quantity models, reorder points, and just-in-time systems. Effective accounts receivable and inventory management requires cooperation across sales, finance, accounting, and other functions.
The document discusses the working capital cycle, which measures how quickly a business can convert current assets like inventory and accounts receivable into cash. It explains the typical steps in the working capital cycle as inventory days, receivable days, and payable days. The working capital cycle formula is given as inventory days + receivable days - payable days. An example calculation is provided. The document also discusses strategies for managing working capital, including aggressive versus conservative approaches and sources of working capital financing.
This document discusses receivables management and credit policies. It defines receivables as debts owed by customers from credit sales. Managing receivables involves granting credit, analyzing costs and risks associated with credit, and setting credit terms and collection policies. The key steps in receivables management are credit analysis of customers, establishing credit standards and terms, monitoring receivables, and following collection procedures. Credit analysis involves obtaining financial and reference information on customers and evaluating their creditworthiness.
This document discusses the management of receivables. It begins by defining receivables as debts owed by customers who have purchased goods on credit but not yet paid. It then discusses the objectives and costs associated with receivables, as well as the benefits. Factors affecting the size of receivables and the importance of having a credit policy to manage receivables are also covered. The document also briefly discusses the management of payables.
Hillary Stiff - HostingCon July 2006, "Mergers & Acquisitions in the Web Host...Cheval Capital, Inc
Hillary Stiff of Cheval Capital (slides 1-16) & Joe Bardenheier of the Endurance International Group (slides 17-19) speak at HostingCon 2006 on M&A in the Web Hosting Industry.
- The document discusses receivables management. Receivables refer to amounts owed by customers from credit sales.
- The objectives of receivables management include optimizing investment in receivables, balancing credit sales and investment, maximizing firm value, and achieving a trade-off between risk and return.
- Costs associated with receivables include opportunity costs, collection costs, delinquency costs, and default costs. Firms must choose an optimal credit policy that balances liberal policies which increase sales versus stringent policies which reduce risks.
Alternative Structures - PO Financing, Factoring & MCA (Series: Business Borr...Financial Poise
Purchase-order financing (P/O financing) is a type of asset-based loan designed to extend credit to a company that needs cash quickly, to fill a customer order. A company may operate with such a small amount of working capital that it cannot afford to pay the cost of producing a customer’s order. P/O financing enables such a company to not turn away business, by borrowing from a lender using the purchase order itself as collateral to support a loan.
Factoring is one of the oldest forms of business financing. Note that the term is “financing” rather than “loan” because factoring is not actually a loan. In a typical factoring arrangement, the company needing financing makes a sale, delivers the product or service and generates an invoice. The factor (the funding source) then purchases the right to collect on that invoice by agreeing to pay the company in need of financing the amount of the invoice minus a discount.
MCA lending is, in summary, an advance on a company’s sales. Financing through a merchant cash advance (MCA) is used mostly by companies that accept credit and debit cards for most of their sales, typically retailers and restaurants. The concept is this: funder purchases a portion of the company’s future credit card receivables for a discounted lump sum. The MCA funder receives the purchased credit card receivables as they are generated either by taking a percentage of the company’s daily credit card proceeds or by debiting a certain amount of funds from the company’s bank account. Depending on the risk profile of the company, it can be a more expensive form of financing for a business compared to other types of financing.
What these three things have in common is that they are each a type of “alternative lending.” Alternative to what? To the type of loan a company can get from a “regulated” commercial bank. This webinar explains these types of financing arrangements, what to consider before entering into them, and provides some tips on how to negotiate them.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/alternative-structures-po-financing-factoring-mca-2021/
Part of the webinar series: Cross-Training for Business Lawyers 2021
Credit insurance, also called trade credit insurance or business credit insurance, is insurance for businesses for non-payment of commercial debt. It is generally offered by private insurance companies to businesses seeking insurance for non-payment due to a customer’s bankruptcy or other types of financial difficulties. It can be a critical information and hedging tool for businesses with income streams heavily dependent upon accounts receivable from customers with questionable credit worthiness or that may be facing an industry-based or regional-based financial downturn. The premium is generally based upon a financial review of the customers of the business. This webinar covers these and related topics.
Factoring Finance: A Quick Guide for Small Business OwnersM1xchange
Running a small business comes with its fair share of challenges, and one of the most significant of those is cash flow. Without enough cash on hand, it can be challenging to pay suppliers, employees, and other expenses. One solution that many small business owners turn to is factoring finance. In this post, we'll explore what factoring finance is and how it can benefit small business owners.
As a B2B software investor, we like to support the startup community with knowledge and content. We hosted a Q&A on fundraising & cash planning amidst Covid19.
This document discusses capital structure and the tradeoffs between debt and equity financing. It notes that the two ways for a business to make money are through debt, which requires fixed payments, or equity, where cash flows are left over after debt payments. It then discusses the costs and benefits of using debt, including tax benefits, added management discipline, bankruptcy costs, agency costs, and loss of flexibility. The document analyzes how these factors impact a firm's optimal capital structure and financing decisions.
This document provides an overview of key topics in working capital management, including accounts receivable and credit policies, inventory management, and cash management. It discusses establishing credit terms, performing credit analyses using tools like credit scoring and Z-scores, developing collection policies, and techniques for reducing inventory levels and managing cash flow through tools like lockbox systems and concentration banking. The goal is to efficiently manage working capital by minimizing cash tied up in receivables and inventory while maximizing returns from short-term investment of idle cash.
The Donald W. Reynolds National Center for Business Journalism presented the free, three-hour workshop, "Detecting Corporate Fraud: Tips from a Crook and a Sleuth," before the Investigative Reporters and Editors Conference on June 25, 2014.
Roddy Boyd, investigative reporter and founder of the Southern Investigative Reporting Foundation, led this investigative training with Sam E. Antar, former CFO of Crazy Eddie, Inc. and convicted felon.
To access all training materials provided during the series of "Detecting Corporate Fraud" workshops, please visit http://bit.ly/cofraud14.
For information about business journalism training and resources, please visit http://businessjournalism.org.
Industrial Tech SW: Category Renewal and CreationChristian Dahlen
Every industrial revolution has created a new set of categories and a new set of players.
Multiple new technologies have emerged, but Samsara and C3.ai are only two companies which have gone public so far.
Manufacturing startups constitute the largest pipeline share of unicorns and IPO candidates in the SF Bay Area, and software startups dominate in Germany.
This document discusses the capital structure decision and how to determine the optimal mix of debt and equity financing for a firm. It covers key concepts such as the costs and benefits of debt financing, including tax benefits, added management discipline, bankruptcy costs, agency costs, and loss of flexibility. It also discusses how the weighted average cost of capital is calculated using market values for debt and equity, and how this cost of capital impacts firm valuation. The optimal capital structure balances these various tradeoffs to minimize the WACC and maximize firm value.
This document summarizes a presentation about the Credit Management Association (CMA). CMA is a non-profit association established in 1883 that provides services to credit and financial managers, including professional education, networking opportunities, and credit information services. The presentation discusses CMA's mission to promote effective business credit management and provides tips on topics like credit policy, accounts receivable management, and key performance metrics.
Topic 3 tools techniques of managing of receivablesRAJKAMAL282
The document discusses various techniques for managing accounts receivable, including establishing a credit policy, assessing customer creditworthiness, setting credit limits, invoicing promptly and collecting overdue debts, and monitoring the accounts receivable system. It also describes invoice discounting and factoring as methods to speed up the receipt of funds from accounts receivable, outlining the key services provided by invoice discounters and factors as well as the advantages and disadvantages of each approach.
This document summarizes key aspects of managing receivables, including:
1) Defining receivables as unpaid amounts from credit sales and outlining objectives like collecting accounts receivable.
2) Explaining reasons companies offer credit like promoting sales and factors affecting credit policies like collection costs.
3) Describing steps in determining credit policies including evaluating customers' character, capital, and repayment ability.
4) Outlining collection policies for overdue accounts involving escalating efforts like phone calls, visits, and legal action if needed.
This document discusses strategies for managing a firm's working capital, including accounts receivable, inventory, and cash. It covers establishing credit policies, analyzing customer creditworthiness, collecting accounts receivable, managing inventory levels, and investing idle cash. The goal is to minimize costs associated with carrying accounts receivable, inventory, and cash while maintaining sufficient liquidity to operate the business.
Key person protection is important for business continuity and to protect against financial loss in the event a key person dies or becomes critically ill. It helps minimize business interruption, ensures loan obligations are met, and protects startups and management buyouts that rely heavily on certain skills and relationships.
Accounts receivable and inventory managementluburtusi
This document discusses key aspects of accounts receivable management, credit analysis, and inventory control. It addresses setting credit policies, analyzing credit applicants, managing the billing and collection process, and following up on overdue accounts. It also outlines the five C's model for credit analysis - character, capacity, capital, collateral, and conditions. Finally, it discusses techniques for inventory control like ABC analysis, economic order quantity models, reorder points, and just-in-time systems. Effective accounts receivable and inventory management requires cooperation across sales, finance, accounting, and other functions.
The document discusses the working capital cycle, which measures how quickly a business can convert current assets like inventory and accounts receivable into cash. It explains the typical steps in the working capital cycle as inventory days, receivable days, and payable days. The working capital cycle formula is given as inventory days + receivable days - payable days. An example calculation is provided. The document also discusses strategies for managing working capital, including aggressive versus conservative approaches and sources of working capital financing.
This document discusses receivables management and credit policies. It defines receivables as debts owed by customers from credit sales. Managing receivables involves granting credit, analyzing costs and risks associated with credit, and setting credit terms and collection policies. The key steps in receivables management are credit analysis of customers, establishing credit standards and terms, monitoring receivables, and following collection procedures. Credit analysis involves obtaining financial and reference information on customers and evaluating their creditworthiness.
This document discusses the management of receivables. It begins by defining receivables as debts owed by customers who have purchased goods on credit but not yet paid. It then discusses the objectives and costs associated with receivables, as well as the benefits. Factors affecting the size of receivables and the importance of having a credit policy to manage receivables are also covered. The document also briefly discusses the management of payables.
Hillary Stiff - HostingCon July 2006, "Mergers & Acquisitions in the Web Host...Cheval Capital, Inc
Hillary Stiff of Cheval Capital (slides 1-16) & Joe Bardenheier of the Endurance International Group (slides 17-19) speak at HostingCon 2006 on M&A in the Web Hosting Industry.
- The document discusses receivables management. Receivables refer to amounts owed by customers from credit sales.
- The objectives of receivables management include optimizing investment in receivables, balancing credit sales and investment, maximizing firm value, and achieving a trade-off between risk and return.
- Costs associated with receivables include opportunity costs, collection costs, delinquency costs, and default costs. Firms must choose an optimal credit policy that balances liberal policies which increase sales versus stringent policies which reduce risks.
Alternative Structures - PO Financing, Factoring & MCA (Series: Business Borr...Financial Poise
Purchase-order financing (P/O financing) is a type of asset-based loan designed to extend credit to a company that needs cash quickly, to fill a customer order. A company may operate with such a small amount of working capital that it cannot afford to pay the cost of producing a customer’s order. P/O financing enables such a company to not turn away business, by borrowing from a lender using the purchase order itself as collateral to support a loan.
Factoring is one of the oldest forms of business financing. Note that the term is “financing” rather than “loan” because factoring is not actually a loan. In a typical factoring arrangement, the company needing financing makes a sale, delivers the product or service and generates an invoice. The factor (the funding source) then purchases the right to collect on that invoice by agreeing to pay the company in need of financing the amount of the invoice minus a discount.
MCA lending is, in summary, an advance on a company’s sales. Financing through a merchant cash advance (MCA) is used mostly by companies that accept credit and debit cards for most of their sales, typically retailers and restaurants. The concept is this: funder purchases a portion of the company’s future credit card receivables for a discounted lump sum. The MCA funder receives the purchased credit card receivables as they are generated either by taking a percentage of the company’s daily credit card proceeds or by debiting a certain amount of funds from the company’s bank account. Depending on the risk profile of the company, it can be a more expensive form of financing for a business compared to other types of financing.
What these three things have in common is that they are each a type of “alternative lending.” Alternative to what? To the type of loan a company can get from a “regulated” commercial bank. This webinar explains these types of financing arrangements, what to consider before entering into them, and provides some tips on how to negotiate them.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/alternative-structures-po-financing-factoring-mca-2021/
Part of the webinar series: Cross-Training for Business Lawyers 2021
Credit insurance, also called trade credit insurance or business credit insurance, is insurance for businesses for non-payment of commercial debt. It is generally offered by private insurance companies to businesses seeking insurance for non-payment due to a customer’s bankruptcy or other types of financial difficulties. It can be a critical information and hedging tool for businesses with income streams heavily dependent upon accounts receivable from customers with questionable credit worthiness or that may be facing an industry-based or regional-based financial downturn. The premium is generally based upon a financial review of the customers of the business. This webinar covers these and related topics.
Factoring Finance: A Quick Guide for Small Business OwnersM1xchange
Running a small business comes with its fair share of challenges, and one of the most significant of those is cash flow. Without enough cash on hand, it can be challenging to pay suppliers, employees, and other expenses. One solution that many small business owners turn to is factoring finance. In this post, we'll explore what factoring finance is and how it can benefit small business owners.
As a B2B software investor, we like to support the startup community with knowledge and content. We hosted a Q&A on fundraising & cash planning amidst Covid19.
This document discusses capital structure and the tradeoffs between debt and equity financing. It notes that the two ways for a business to make money are through debt, which requires fixed payments, or equity, where cash flows are left over after debt payments. It then discusses the costs and benefits of using debt, including tax benefits, added management discipline, bankruptcy costs, agency costs, and loss of flexibility. The document analyzes how these factors impact a firm's optimal capital structure and financing decisions.
This document provides an overview of key topics in working capital management, including accounts receivable and credit policies, inventory management, and cash management. It discusses establishing credit terms, performing credit analyses using tools like credit scoring and Z-scores, developing collection policies, and techniques for reducing inventory levels and managing cash flow through tools like lockbox systems and concentration banking. The goal is to efficiently manage working capital by minimizing cash tied up in receivables and inventory while maximizing returns from short-term investment of idle cash.
The Donald W. Reynolds National Center for Business Journalism presented the free, three-hour workshop, "Detecting Corporate Fraud: Tips from a Crook and a Sleuth," before the Investigative Reporters and Editors Conference on June 25, 2014.
Roddy Boyd, investigative reporter and founder of the Southern Investigative Reporting Foundation, led this investigative training with Sam E. Antar, former CFO of Crazy Eddie, Inc. and convicted felon.
To access all training materials provided during the series of "Detecting Corporate Fraud" workshops, please visit http://bit.ly/cofraud14.
For information about business journalism training and resources, please visit http://businessjournalism.org.
Industrial Tech SW: Category Renewal and CreationChristian Dahlen
Every industrial revolution has created a new set of categories and a new set of players.
Multiple new technologies have emerged, but Samsara and C3.ai are only two companies which have gone public so far.
Manufacturing startups constitute the largest pipeline share of unicorns and IPO candidates in the SF Bay Area, and software startups dominate in Germany.
Profiles of Iconic Fashion Personalities.pdfTTop Threads
The fashion industry is dynamic and ever-changing, continuously sculpted by trailblazing visionaries who challenge norms and redefine beauty. This document delves into the profiles of some of the most iconic fashion personalities whose impact has left a lasting impression on the industry. From timeless designers to modern-day influencers, each individual has uniquely woven their thread into the rich fabric of fashion history, contributing to its ongoing evolution.
Ellen Burstyn: From Detroit Dreamer to Hollywood Legend | CIO Women MagazineCIOWomenMagazine
In this article, we will dive into the extraordinary life of Ellen Burstyn, where the curtains rise on a story that's far more attractive than any script.
Best Competitive Marble Pricing in Dubai - ☎ 9928909666Stone Art Hub
Stone Art Hub offers the best competitive Marble Pricing in Dubai, ensuring affordability without compromising quality. With a wide range of exquisite marble options to choose from, you can enhance your spaces with elegance and sophistication. For inquiries or orders, contact us at ☎ 9928909666. Experience luxury at unbeatable prices.
Cover Story - China's Investment Leader - Dr. Alyce SUmsthrill
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
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NIMA2024 | De toegevoegde waarde van DEI en ESG in campagnes | Nathalie Lam |...BBPMedia1
Nathalie zal delen hoe DEI en ESG een fundamentele rol kunnen spelen in je merkstrategie en je de juiste aansluiting kan creëren met je doelgroep. Door middel van voorbeelden en simpele handvatten toont ze hoe dit in jouw organisatie toegepast kan worden.
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Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
The global retail industry has weathered numerous storms, with the financial crisis of 2008 serving as a poignant reminder of the sector's resilience and adaptability. However, as we navigate the complex landscape of 2024, retailers face a unique set of challenges that demand innovative strategies and a fundamental shift in mindset. This white paper contrasts the impact of the 2008 recession on the retail sector with the current headwinds retailers are grappling with, while offering a comprehensive roadmap for success in this new paradigm.
The Steadfast and Reliable Bull: Taurus Zodiac Signmy Pandit
Explore the steadfast and reliable nature of the Taurus Zodiac Sign. Discover the personality traits, key dates, and horoscope insights that define the determined and practical Taurus, and learn how their grounded nature makes them the anchor of the zodiac.
1. Copyright 2005 by Thomson Learning, Inc.
Chapter 5
Accounts Receivable Management
A / R
2. Copyright 2005 by Thomson Learning, Inc.
The Cash Flow Timeline
Order Order Sale Payment Sent Cash
Placed Received Received
Accounts Collection
< Inventory > < Receivable > < Float >
Time ==>
Accounts Disbursement
< Payable > < Float >
Invoice Received Payment Sent Cash Disbursed
3. Copyright 2005 by Thomson Learning, Inc.
Learning Objectives
Define credit policy and indicate its components.
Describe the typical credit-granting sequence.
Apply net present value analysis to credit extension
decisions.
Define credit scoring and explain limitations.
List the elements in a credit rating report.
Describe how receivables management can benefit
from EDI.
4. Copyright 2005 by Thomson Learning, Inc.
Trade Credit and Shareholder Value
Trade credit arises when goods sold under delayed
payment terms
Traced to Romans due to obstacles faced in
transferring money through various trading areas
Credit terms are taken for granted today
Value can be added by managing three areas:
– aggregate investment in receivables
– credit terms
– credit standards
Over-investing in receivables can be costly
...but, if credit terms are not competitive, then lost
sales can be costly
5. Copyright 2005 by Thomson Learning, Inc.
Conclusion
Minimize bad debts and outstanding receivables
Maintain financial flexibility
Optimize mix of company assets
Convert receivables to cash in a timely manner
Analyze customer risk
Respond to customer needs
6. Copyright 2005 by Thomson Learning, Inc.
A/R Management and Shareholder
Value
Marketing Strategy
Market Share Obj.
Aggregate Inv. in A/R Credit Terms Credit Standards
Total Dollar Investment Length of Time to Pay Acceptance of Marg Cust.
Max Shareholder Value
7. Copyright 2005 by Thomson Learning, Inc.
Trade vs. Bank Credit
Length of terms
Security
Amounts involved
Resource transferred (goods vs. money)
Extent of analysis
8. Copyright 2005 by Thomson Learning, Inc.
Why Extend Credit?
Financial Motive
Operating Motive
Contracting Motive
Pricing Motive
All reasons are related to market imperfections
9. Copyright 2005 by Thomson Learning, Inc.
Financial Motive
Potential of getting a higher price
Sellers raise capital at lower rates than customers
and have cost advantages vis-a-vis banks due to:
– similarity of customers
– the information gathered in the selling process
– lower probability of default (the goods purchased are an
essential element of the buyer’s business)
– seller can more easily resell product if payment is not made.
10. Copyright 2005 by Thomson Learning, Inc.
Operating Motive
Respond to variable and uncertain demand
Change credit terms rather than:
– install extra capacity,
– building or depleting inventories,
– or forcing customers to wait.
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Contracting Cost Motive
Buyer gets to inspect goods prior to payment
Seller has less theft with separation of collection
and product delivery
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Pricing Motive
Change price by changing credit terms
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Trends Affecting Trade Credit
Zero net working capital objective
Improved internal and external credit-related
information
Electronic commerce
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The Credit Decision Process
Marketing contact
Credit investigation
Customer contact for information
Finalize written documents, e.g.. security agreements
Establish customer credit file
Financial analysis
Time
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Basic Credit Granting Model
S - EXP(S)
NPV = ----------------- - VCR(S)
1 + iCP
Where:
NPV = net present value of the credit sale
VCR = variable cost ratio
S = dollar amount of credit sale
EXP = credit administration and collection expense ratio
i = daily interest rate
CP = collection period for sale
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Managing the Credit Policy
Should we extend credit?
Credit policy components
Credit-granting decision
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Should We Extend Credit?
Follow industry practice
Extent and form of credit offer
– in-house credit card
– sell receivables to a factor
– captive finance company?
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Components of Credit Policy
Development of credit standards
– profile of minimally acceptable credit worthy customer
Credit terms
– credit period
– cash discount
Credit limit
– maximum dollar level of credit balances
Collection procedures
– how long to wait past due date to initiate collection efforts
– methods of contact
– whether and at what point to refer account to collection agency
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Credit-Granting Decision
Development of credit standards
Gathering necessary information
Credit analysis: applying credit standards
Risk analysis
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Grant-Granting Sequence
No
Order and credit
request received
New/increased
credit limit
Material
change in
customer status
Redo credit
investigation
Size of proposed
credit limit
Medium Small
Large
Indepth
credit invest.
Moderate
credit invest.
Minimal
credit invest.
Check new A/R
total vs credit lmt
No Yes
Yes
Extend Credit
No
Yes
Record
disposition
Set up,post
A/R, ship
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Credit Standards
Based on five C's of Credit
– Character
– Capital
– Capacity
– Collateral
– Conditions
Determine risk classification system
Link customer evaluations to credit standards
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Gathering Information
credit reporting agencies, e.g.. Dun & Bradstreet
credit interchange bureaus, NACM
bank letters
references from other suppliers
financial statements
field data gathered by sales reps
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Credit Analysis: Applying the
Standards
Nonfinancial
– concerned with willingness to pay, character
Financial
– ability to pay, financial ratios etc.. (other C’s of credit)
Credit scoring models
– Example:
Y = .000025(INCOME) + 0.50(PAYHIST) + 0.25(EMPLOYMT)
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Emergence of Expert Systems
Example of decision rule:
“If gross income is equal to or grater than $20,000
and the applicant has not been delinquent and
gross income per household member is equal to or
greater than $12,000 and debt/equity ratio is equal
to or greater than 30% but less than 50% and
personal property is equal to or greater than
$50,000, then grant credit.”
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Factors Affecting Credit Terms
Competition
Operating cycle
Type of good (raw materials vs finished goods,
perishables, etc.)
Seasonality of demand
Consumer acceptance
Cost and pricing
Customer type
Product profit margin
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Cash Discounts
The lower the VC, the higher the feasible discount
Based on company’s cost of funds
Consider timing effect when changing discounts
Should be based on product’s price elasticity
Higher the bad debt experience, higher the optimal
discount
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Practice of Taking Cash Discounts
51% of firms always took cash discount
40% sometimes
9% take discount and pay late
Study found that 4 or 5 companies would be more
profitable if cash discount was eliminated
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A/R Management in Practice
Discounts appear to be changed to match
competitors, not inflation or interest rates
The higher a firm’s contribution margin, the more
likely the firm should be to offer discounts.
A price cut is thought to have more impact than
instituting a cash discount
The more receivables a firm has, does not
necessarily relate to use of penalty fees
The greater amount of receivables does not relate
to a more active credit evaluation.
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Receivables, Collections, and EDI
If credit approval is delayed...
– buyers using EDI purchase orders and JIT manufacturing can
encounter serious problems.
– sellers can now ship within hours of receiving orders...thus seller
must be able to handle electronically transmitted orders.
Seller may also issues electronic invoices and be
paid electronically using an EDI-capable bank so
that remittance data can be automatically read by
seller’s A/R system
Trend is for use of data transmission to automate
the cash application process
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Summary
Investment in A/R represents a significant
investment.
Key aspects outlined
– credit policy
– credit standards
– credit granting sequence
– credit limits
– credit terms
Management of A/R is influenced by what
competitors are doing not by shareholder wealth
considerations.
Proper use of NPV techniques can ensure that
credit decisions enhance shareholder value.