This study examined the collection techniques used by 60 lending companies in Ermita, Manila. It found that most companies have been operating for over 6 years, have monthly average receivables over 1,000,000 PHP, and prioritize collecting due debts. Their most common techniques are repetitive calls to debtors and electronic transactions. The average receivable collection period for most companies is over 31 days, and the typical bad debt percentage is between 6-10%. The study concluded that the companies are efficient in collecting receivables and managing bad debts based on their average collection periods and percentages. There was no statistically significant difference found in efficiency levels based on these metrics.
The document discusses research into debt recovery practices in the UK. It finds that over 60% of UK adults have experienced debt recovery procedures. The reasons for debt are often not due to affordability issues alone, and include factors like forgetfulness and protest over inaccurate bills. Retailers are seen as using best practices like friendly staff and payment options, while energy companies, local authorities, and credit card companies often use poor practices like aggressive tactics. Getting debt recovery right can improve customer loyalty and promptness of future payments, while poor practices may cause customers to switch or delay payments in retaliation.
The document discusses competition in the Indian microfinance sector and its effects. It presents results from a study analyzing loan repayment data from multiple MFIs with over 500,000 client records. The study found that approximately 10% of MFI clients had loans from multiple lenders. Interviews with these clients suggested they borrowed from multiple MFIs primarily to obtain larger loan sizes or as a backup in case of default. While competition benefits customers through lower rates and better service, concerns remain around potential negatives like over-indebtedness and mission drift. The document advocates further research to better understand the impacts of competition.
ExtraFunds is seeking $1 million in investment capital to fund operating expenses like hiring more call center employees and marketing. Investors will receive 12% annual interest on promissory notes. ExtraFunds services loans for online lenders, providing marketing, underwriting, and collections. It has made over 41,000 loans totaling $14 million. ExtraFunds projects continued growth over the next 3 years by increasing marketing and call center staff.
This document summarizes a presentation on estimating supply and demand for microcredit in a community. The presentation is given by representatives from Friedman Associates, an organization that helps microfinance institutions achieve their goals of sustainable and economically vibrant communities. The presentation covers conducting a supply and demand analysis through quantitative data analysis and qualitative key informant interviews. It discusses estimating the size of the capital gap in a community and identifying high priority zip codes for microloan programs. It also provides guidance on assessing if a microloan program is ready to ramp up, including reviewing strategic goals, loan guidelines, lending procedures, use of portfolio data, and investing human resources. The overall document aims to help microfinance organizations better understand their market opportunities and make strategic decisions about their micro
Transworld Systems White Paper EducationDoug Graham
This document discusses the challenges higher education institutions face in balancing enrollment goals, retention rates, and cash flow. It explores ways for institutions to improve cash flow without compromising retention, such as by establishing policies for managing student accounts receivable and outsourcing early-stage debt collection to specialized agencies. Outsourcing can help optimize limited institutional resources, increase early collection efforts, and reduce uncollected debt while supporting retention. The document advocates outsourcing as a way for institutions to yield higher returns compared to handling collections internally or using percentage-based agencies.
Performance evaluation of credit risk management : A Case study on State-owne...Selim Muhammad
This document discusses the performance of credit risk management at state-owned commercial banks in Bangladesh. It aims to assess trends in non-performing loans, identify the causes of non-performing loans, analyze their impact on bank profitability, and recommend ways to reduce non-performing loans. The study finds that poor credit risk management practices have led to high non-performing loan percentages at these banks. Key causes identified include lack of proper loan analysis, approval of loans under political pressure, and weak monitoring and internal controls. High non-performing loans are found to negatively impact bank capital, revenues, and profits. The document recommends strengthening credit risk management guidelines and practices to reduce non-performing loans.
The sales operations performance declined significantly in FY15 despite efforts to increase marketing and discounts. This was due to a rise in discounts given, salaries, marketing costs, and interest costs from high inventory levels. Corrective actions included reducing dependency on discounts, revising incentives, improving lead conversion, decreasing inventory levels, and focusing on customer satisfaction rather than just sales volume.
The document discusses research into debt recovery practices in the UK. It finds that over 60% of UK adults have experienced debt recovery procedures. The reasons for debt are often not due to affordability issues alone, and include factors like forgetfulness and protest over inaccurate bills. Retailers are seen as using best practices like friendly staff and payment options, while energy companies, local authorities, and credit card companies often use poor practices like aggressive tactics. Getting debt recovery right can improve customer loyalty and promptness of future payments, while poor practices may cause customers to switch or delay payments in retaliation.
The document discusses competition in the Indian microfinance sector and its effects. It presents results from a study analyzing loan repayment data from multiple MFIs with over 500,000 client records. The study found that approximately 10% of MFI clients had loans from multiple lenders. Interviews with these clients suggested they borrowed from multiple MFIs primarily to obtain larger loan sizes or as a backup in case of default. While competition benefits customers through lower rates and better service, concerns remain around potential negatives like over-indebtedness and mission drift. The document advocates further research to better understand the impacts of competition.
ExtraFunds is seeking $1 million in investment capital to fund operating expenses like hiring more call center employees and marketing. Investors will receive 12% annual interest on promissory notes. ExtraFunds services loans for online lenders, providing marketing, underwriting, and collections. It has made over 41,000 loans totaling $14 million. ExtraFunds projects continued growth over the next 3 years by increasing marketing and call center staff.
This document summarizes a presentation on estimating supply and demand for microcredit in a community. The presentation is given by representatives from Friedman Associates, an organization that helps microfinance institutions achieve their goals of sustainable and economically vibrant communities. The presentation covers conducting a supply and demand analysis through quantitative data analysis and qualitative key informant interviews. It discusses estimating the size of the capital gap in a community and identifying high priority zip codes for microloan programs. It also provides guidance on assessing if a microloan program is ready to ramp up, including reviewing strategic goals, loan guidelines, lending procedures, use of portfolio data, and investing human resources. The overall document aims to help microfinance organizations better understand their market opportunities and make strategic decisions about their micro
Transworld Systems White Paper EducationDoug Graham
This document discusses the challenges higher education institutions face in balancing enrollment goals, retention rates, and cash flow. It explores ways for institutions to improve cash flow without compromising retention, such as by establishing policies for managing student accounts receivable and outsourcing early-stage debt collection to specialized agencies. Outsourcing can help optimize limited institutional resources, increase early collection efforts, and reduce uncollected debt while supporting retention. The document advocates outsourcing as a way for institutions to yield higher returns compared to handling collections internally or using percentage-based agencies.
Performance evaluation of credit risk management : A Case study on State-owne...Selim Muhammad
This document discusses the performance of credit risk management at state-owned commercial banks in Bangladesh. It aims to assess trends in non-performing loans, identify the causes of non-performing loans, analyze their impact on bank profitability, and recommend ways to reduce non-performing loans. The study finds that poor credit risk management practices have led to high non-performing loan percentages at these banks. Key causes identified include lack of proper loan analysis, approval of loans under political pressure, and weak monitoring and internal controls. High non-performing loans are found to negatively impact bank capital, revenues, and profits. The document recommends strengthening credit risk management guidelines and practices to reduce non-performing loans.
The sales operations performance declined significantly in FY15 despite efforts to increase marketing and discounts. This was due to a rise in discounts given, salaries, marketing costs, and interest costs from high inventory levels. Corrective actions included reducing dependency on discounts, revising incentives, improving lead conversion, decreasing inventory levels, and focusing on customer satisfaction rather than just sales volume.
Benefits-of-Financial-Technology-for-Banks_RMA Jan 2017Max Zahner
This document summarizes how community banks can use technology to successfully compete in commercial and industrial lending. It discusses that C&I lending can provide higher returns than other types of lending but is difficult for banks to do well due to the complex underwriting and loan administration processes required. It then describes how adopting new technology can streamline these processes, reducing the time and costs to underwrite loans and conduct loan reviews. This allows community banks to profitably lend to smaller businesses and increase their return on equity through expanding their C&I lending business.
This document summarizes a research study that assessed the effect of client appraisal on the efficiency of microfinance banks in Adamawa State, Nigeria. The study found that client appraisal, which involves evaluating customers based on factors like character, capacity, collateral, capital, and condition, has a positive effect on the efficiency and productivity of microfinance banks. Specifically, effective client appraisal allows microfinance banks to better understand customer creditworthiness, minimize loan defaults and losses, and improve overall financial performance. The study concluded that client appraisal is an important part of effective credit management that can help microfinance banks operate efficiently and profitably.
The document discusses working capital management of receivables. It states that firms offer credit to customers to boost sales, tying up funds in receivables. The objectives of receivables management are to optimize returns on this investment. It involves determining credit policies like credit standards, terms and collection efforts to balance sales and costs of carrying debtors. Techniques discussed include credit analysis, controlling receivables, financing options like pledging and factoring receivables, and tools like reengineering receivables processes, technology, credit scoring and collection policies.
Feasibility Study on Employer-Sponsored Small Dollar LoansBruno Gremez
Insightful report on the benefits for hard-working people of employer-sponsored small dollar loans. Those small dollar loans are repaid through salary deduction and enable those workers to (1) avoid often predatory lending alternatives, (2) (re)build their credit scores and track records, and (2) ave and build up rainy day funds.
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.
An Analysis of Factors Influencing Customer Creditworthiness in the Banking S...Dr. Amarjeet Singh
This research is based on Bahraini bankers’ perception on the factors influencing customer creditworthiness in the banking sector of Kingdom of Bahrain. We consider that the research was done in the Kingdom of Bahrain which has a growing banking industry. To enhance the whole procedure of the creditworthiness, it is vital for an employer to understand the most important factors influencing customer creditworthiness. The purpose of the study was to investigate the factors influencing customers creditworthiness in the banking industry. The creditworthiness can be assessed through qualitative factors, quantitative factors and risk factors. The research was conducted through a survey, using the questionnaire as the research instrument. The respondents of the study are employees of banks across the Kingdom dealing with creditworthiness. The statistical tools used in the study are Multiple Regression Analyses and weighted mean. The researcher has found that there is significant relationship between all three factors and creditworthiness, and they don’t equally influence the creditworthiness. The research provides recommendations to banks in assessing the creditworthiness. The researcher recommended that employees must use the most effective methods such as credit scoring to conduct the analysis of creditworthiness in order to make effective decisions. Moreover, the researcher recommended that analysts should take into considerations the most effective factors in the analysis process and they must not neglect other.
Microfinancing aims to provide financial services to the poor by making loans accessible. However, microfinancing involves significant risks due to the unpredictable incomes of borrowers and weak property rights. Successful microfinancing requires an in-depth understanding of borrowers' social environments and financial needs. It also relies on social pressures rather than traditional collateral. Microfinancing institutions face various financial, operational, and strategic risks that must be carefully managed, such as credit, liquidity, interest rate, and fraud risks. Both the characteristics of the institutions and macroeconomic factors can impact the sustainability of microfinancing.
This document summarizes a survey analyzing receivables practices in American corporations. The survey was conducted through a mail survey of 89 credit managers from American firms. The survey covered presale, postsale, and ongoing receivables issues. Key findings included that firms use multiple methods for credit decisions and monitoring to decrease costs while minimizing late payments. Firms also set credit limits and used varied collection methods to speed cash flows. The conclusion was that overall, the surveyed firms' receivables practices worked to maximize shareholder wealth through decreased costs and increased cash flows. However, the small sample size limited generalization of the results.
This document outlines a seminar on account receivable management. It includes an introduction defining account receivables and their importance. It then covers responsibilities, key performance indicators, best practices like credit evaluation and invoicing, tools and technologies, and two case studies on companies that successfully improved cash flow and reduced overdue payments through effective receivables management strategies. The seminar aims to provide a comprehensive understanding of managing receivables to optimize cash flow and customer relationships.
Creating payment energy research report (Mastercard, Basware 2014)Paypany
This document discusses the findings of research on business payment practices and cash management. Some key findings include:
- Many businesses have more cash on hand than a year ago but do not fully utilize it, focusing instead on hoarding cash.
- Most businesses feel pressure to lower prices but many also resort to delaying payments to suppliers.
- Late payments are widely seen as an unavoidable reality, despite acknowledgments of social responsibility to pay suppliers promptly.
- Cash management practices can have unintended negative consequences for business relationships and the wider commercial environment.
- There are opportunities to improve payment processes through technology and reviewing payment strategies.
This document provides an acknowledgement and declaration for a project report on studying consumer loan financing at Capital First with a focus on durable products.
The acknowledgement thanks the author's project guide, mentor, faculty mentor and other faculty members for their support and guidance during the project. It also thanks friends and family.
The declaration states that the report is the author's original work and has not been used for any other purpose. It declares that the work has not been previously submitted for any other award or degree.
Accounts Payable Administration and Profitability of Quoted Manufacturing Com...PUBLISHERJOURNAL
This study was carried out to examine accounts payable administration and profitability of quoted manufacturing companies in Nigeria with reference to consumer goods sector. This was motivated by the desire to learn how proper administration of accounts payable enhances profitability in the wake of the widespread corporate failures in Nigeria and the rest of the world. Accounts payable ratio and short-term debt ratio were represented by accounts payable administration while return on assets was used as proxy for profitability. The study used purposive sampling technique to extract data from the annual reports of manufacturing companies quoted on the Nigerian Exchange Group Plc as of December 31st, 2022. Secondary data were gathered for the study. The study covered ten years’ time frame from 2013 to 2022. Descriptive and inferential statistics were used to examine the data specifically through regression analysis. The outcome of the data analysis showed that accounts payable ratio has a negligible negative influence on return on assets; short-term debt ratio significantly influences the return on assets; the combined variables (accounts payable ratio and short-term debt ratio) significantly influence the profitability of manufacturing companies in Nigeria. This implies that, accounts payable ratio and short-term debt ratio influences the profit generated by manufacturing companies in Nigeria considering it aggregate effect. It was advised that, sound and pragmatic approach should be maintained in the administration of accounts payable in manufacturing companies in order to positively influence the profitability of manufacturing companies in the country. Administration of accounts payable should be carried out by financial expert in order to ensure that financial obligation is met to vendors of goods and services when it is due. In order to ensure minimal supply interruption and increase liquidity capacity, institutions should negotiate better terms of credit with their suppliers and extend the accounts payment period.
Keywords: Accounts Payable Administration, Profitability and Quoted Manufacturing Companies.
________________________________________
A Survey and Analysis of Receivables Practices in American CorporationsSudarshan Kadariya
This document summarizes a presentation on a survey analyzing receivables practices in American corporations. The presentation outlines the purpose, methodology, respondent profile, major findings, and critical appraisal. The survey had 89 respondents from various industries. Major findings included that setting credit limits, monitoring receivables, and reporting to management supported maximizing shareholder wealth, while obtaining credit information from multiple sources and using multiple payment collection methods did not. The strengths of the study were providing basic insights, while weaknesses included limitations of the survey methodology and clustering responses.
Entrepreneurs as customer group of digital banks in SingaporeVarun Mittal
This document summarizes opportunities for financial institutions to help entrepreneurs through digital solutions. It notes that the number of entrepreneurs is rising globally but that they face challenges obtaining funding and managing finances. A recommended solution is a digital loan application process that can automatically assess risk and generate reports to help lenders. The document also outlines needs around insurance, raising capital, and cash flow management that digital tools could address for entrepreneurs.
Business strategy and sustainability of microfinance institutions in ghanaAlexander Decker
This document summarizes a study on business strategies and sustainability of microfinance institutions in Ghana. It discusses six factors examined in the study: effective screening mechanisms, enforcing group collateral, regular client meetings, minimizing default rates, intensifying peer monitoring, and financial product innovation.
The study used both qualitative interviews and a quantitative survey of microfinance institutions. It found that most institutions employed screening mechanisms like background checks. Group collateral was the most common type of collateral used. Institutions also held regular weekly meetings with clients to monitor loans. The study revealed that all six factors examined were significant to the sustainability of microfinance institutions in Ghana.
Effect of Debt Recovery Techniques on Performance of Selected Financial Insti...inventionjournals
The purpose of the was to examine the effect of debt recovery techniques on performance of financial institutions. The study objectives were to examine the effect of account transactions, guarantors, auction and the effect of collateral retention on performance of financial institutions in Eldoret town. The study was guided by customer-supplier relationship theory. The research design adopted a descriptive survey design. The study was conducted on Financial Institutions within Eldoret town, Uasin Gishu County. The target population consisted of 185 employees from the credit and management department of selected financial institutions. The study targeted five commercial banks and four micro-finance institutions. The study used purposive sampling technique to select 125 respondents. The researcher used questionnaire as data collection instruments. The data collected in the study was analyzed by the use of descriptive statistics and inferential statistics. This includes the use of descriptive statistical methods to analyze data consisting of frequency, mean and standard deviation. The relationship between variables was done using multiple linear regression models. Graphs, tables and pie charts were used to present the results. Based on the findings of the study, the study recommended among others that financial institutions should review account histories as suggestion tools for accounts such as savings accounts, investment accounts and also retirement accounts for additional information on customer ability to repay their loans. The study suggests that same study be done in other financial institutions not considered in this study to allow generalizations and also provide rich advances for future studies. Further research is also required to study the factors determining debt recovery in financial institutions.
How Debt Collection Agencies Help California Businesses.pdfCedar Financial
This comprehensive document highlights the invaluable role that debt collection agencies play in supporting businesses across California. By outlining the various ways in which these agencies contribute to the financial health and stability of businesses, this resource offers practical insights and strategies for leveraging debt collection services to enhance cash flow, streamline operations, and promote sustainable growth within the dynamic Californian business landscape.
ExtraFunds is a proven servicer in the short-term online lending marketplace. ExtraFunds is currently seeking to expand its operations by raising capital via Crowdfunder. For more details about the offering, visit www.crowdfunder.com/extrafunds.
Many countries have seen the importance of financial education by making financial
education a national strategy. In Vietnam, although the National Strategies for Inclusive Financial
Education has been proposed since 2017 and officially included in the National Financial Inclusion
Strategy in 2020, however, financial education is still quite new, and many people are not aware of
the necessity of financial l
Today, in the rapidly emerging globalization process, increasing the competitiveness of enterprises
depends on increasing of their firm performance. Although there are many methods and techniques affecting
firm performance, Information technology (IT) capabilities has become one of the most widely used method,
especially in dealing with supply chain matters of a firm. The aim of our study is to express whether innovation
and organization learning is effective as intermediate variable to the effects of IT capabilities at firm’s
performance. The opinion which claim
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This document summarizes how community banks can use technology to successfully compete in commercial and industrial lending. It discusses that C&I lending can provide higher returns than other types of lending but is difficult for banks to do well due to the complex underwriting and loan administration processes required. It then describes how adopting new technology can streamline these processes, reducing the time and costs to underwrite loans and conduct loan reviews. This allows community banks to profitably lend to smaller businesses and increase their return on equity through expanding their C&I lending business.
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Insightful report on the benefits for hard-working people of employer-sponsored small dollar loans. Those small dollar loans are repaid through salary deduction and enable those workers to (1) avoid often predatory lending alternatives, (2) (re)build their credit scores and track records, and (2) ave and build up rainy day funds.
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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.
An Analysis of Factors Influencing Customer Creditworthiness in the Banking S...Dr. Amarjeet Singh
This research is based on Bahraini bankers’ perception on the factors influencing customer creditworthiness in the banking sector of Kingdom of Bahrain. We consider that the research was done in the Kingdom of Bahrain which has a growing banking industry. To enhance the whole procedure of the creditworthiness, it is vital for an employer to understand the most important factors influencing customer creditworthiness. The purpose of the study was to investigate the factors influencing customers creditworthiness in the banking industry. The creditworthiness can be assessed through qualitative factors, quantitative factors and risk factors. The research was conducted through a survey, using the questionnaire as the research instrument. The respondents of the study are employees of banks across the Kingdom dealing with creditworthiness. The statistical tools used in the study are Multiple Regression Analyses and weighted mean. The researcher has found that there is significant relationship between all three factors and creditworthiness, and they don’t equally influence the creditworthiness. The research provides recommendations to banks in assessing the creditworthiness. The researcher recommended that employees must use the most effective methods such as credit scoring to conduct the analysis of creditworthiness in order to make effective decisions. Moreover, the researcher recommended that analysts should take into considerations the most effective factors in the analysis process and they must not neglect other.
Microfinancing aims to provide financial services to the poor by making loans accessible. However, microfinancing involves significant risks due to the unpredictable incomes of borrowers and weak property rights. Successful microfinancing requires an in-depth understanding of borrowers' social environments and financial needs. It also relies on social pressures rather than traditional collateral. Microfinancing institutions face various financial, operational, and strategic risks that must be carefully managed, such as credit, liquidity, interest rate, and fraud risks. Both the characteristics of the institutions and macroeconomic factors can impact the sustainability of microfinancing.
This document summarizes a survey analyzing receivables practices in American corporations. The survey was conducted through a mail survey of 89 credit managers from American firms. The survey covered presale, postsale, and ongoing receivables issues. Key findings included that firms use multiple methods for credit decisions and monitoring to decrease costs while minimizing late payments. Firms also set credit limits and used varied collection methods to speed cash flows. The conclusion was that overall, the surveyed firms' receivables practices worked to maximize shareholder wealth through decreased costs and increased cash flows. However, the small sample size limited generalization of the results.
This document outlines a seminar on account receivable management. It includes an introduction defining account receivables and their importance. It then covers responsibilities, key performance indicators, best practices like credit evaluation and invoicing, tools and technologies, and two case studies on companies that successfully improved cash flow and reduced overdue payments through effective receivables management strategies. The seminar aims to provide a comprehensive understanding of managing receivables to optimize cash flow and customer relationships.
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This document discusses the findings of research on business payment practices and cash management. Some key findings include:
- Many businesses have more cash on hand than a year ago but do not fully utilize it, focusing instead on hoarding cash.
- Most businesses feel pressure to lower prices but many also resort to delaying payments to suppliers.
- Late payments are widely seen as an unavoidable reality, despite acknowledgments of social responsibility to pay suppliers promptly.
- Cash management practices can have unintended negative consequences for business relationships and the wider commercial environment.
- There are opportunities to improve payment processes through technology and reviewing payment strategies.
This document provides an acknowledgement and declaration for a project report on studying consumer loan financing at Capital First with a focus on durable products.
The acknowledgement thanks the author's project guide, mentor, faculty mentor and other faculty members for their support and guidance during the project. It also thanks friends and family.
The declaration states that the report is the author's original work and has not been used for any other purpose. It declares that the work has not been previously submitted for any other award or degree.
Accounts Payable Administration and Profitability of Quoted Manufacturing Com...PUBLISHERJOURNAL
This study was carried out to examine accounts payable administration and profitability of quoted manufacturing companies in Nigeria with reference to consumer goods sector. This was motivated by the desire to learn how proper administration of accounts payable enhances profitability in the wake of the widespread corporate failures in Nigeria and the rest of the world. Accounts payable ratio and short-term debt ratio were represented by accounts payable administration while return on assets was used as proxy for profitability. The study used purposive sampling technique to extract data from the annual reports of manufacturing companies quoted on the Nigerian Exchange Group Plc as of December 31st, 2022. Secondary data were gathered for the study. The study covered ten years’ time frame from 2013 to 2022. Descriptive and inferential statistics were used to examine the data specifically through regression analysis. The outcome of the data analysis showed that accounts payable ratio has a negligible negative influence on return on assets; short-term debt ratio significantly influences the return on assets; the combined variables (accounts payable ratio and short-term debt ratio) significantly influence the profitability of manufacturing companies in Nigeria. This implies that, accounts payable ratio and short-term debt ratio influences the profit generated by manufacturing companies in Nigeria considering it aggregate effect. It was advised that, sound and pragmatic approach should be maintained in the administration of accounts payable in manufacturing companies in order to positively influence the profitability of manufacturing companies in the country. Administration of accounts payable should be carried out by financial expert in order to ensure that financial obligation is met to vendors of goods and services when it is due. In order to ensure minimal supply interruption and increase liquidity capacity, institutions should negotiate better terms of credit with their suppliers and extend the accounts payment period.
Keywords: Accounts Payable Administration, Profitability and Quoted Manufacturing Companies.
________________________________________
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This document summarizes a presentation on a survey analyzing receivables practices in American corporations. The presentation outlines the purpose, methodology, respondent profile, major findings, and critical appraisal. The survey had 89 respondents from various industries. Major findings included that setting credit limits, monitoring receivables, and reporting to management supported maximizing shareholder wealth, while obtaining credit information from multiple sources and using multiple payment collection methods did not. The strengths of the study were providing basic insights, while weaknesses included limitations of the survey methodology and clustering responses.
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This document summarizes opportunities for financial institutions to help entrepreneurs through digital solutions. It notes that the number of entrepreneurs is rising globally but that they face challenges obtaining funding and managing finances. A recommended solution is a digital loan application process that can automatically assess risk and generate reports to help lenders. The document also outlines needs around insurance, raising capital, and cash flow management that digital tools could address for entrepreneurs.
Business strategy and sustainability of microfinance institutions in ghanaAlexander Decker
This document summarizes a study on business strategies and sustainability of microfinance institutions in Ghana. It discusses six factors examined in the study: effective screening mechanisms, enforcing group collateral, regular client meetings, minimizing default rates, intensifying peer monitoring, and financial product innovation.
The study used both qualitative interviews and a quantitative survey of microfinance institutions. It found that most institutions employed screening mechanisms like background checks. Group collateral was the most common type of collateral used. Institutions also held regular weekly meetings with clients to monitor loans. The study revealed that all six factors examined were significant to the sustainability of microfinance institutions in Ghana.
Effect of Debt Recovery Techniques on Performance of Selected Financial Insti...inventionjournals
The purpose of the was to examine the effect of debt recovery techniques on performance of financial institutions. The study objectives were to examine the effect of account transactions, guarantors, auction and the effect of collateral retention on performance of financial institutions in Eldoret town. The study was guided by customer-supplier relationship theory. The research design adopted a descriptive survey design. The study was conducted on Financial Institutions within Eldoret town, Uasin Gishu County. The target population consisted of 185 employees from the credit and management department of selected financial institutions. The study targeted five commercial banks and four micro-finance institutions. The study used purposive sampling technique to select 125 respondents. The researcher used questionnaire as data collection instruments. The data collected in the study was analyzed by the use of descriptive statistics and inferential statistics. This includes the use of descriptive statistical methods to analyze data consisting of frequency, mean and standard deviation. The relationship between variables was done using multiple linear regression models. Graphs, tables and pie charts were used to present the results. Based on the findings of the study, the study recommended among others that financial institutions should review account histories as suggestion tools for accounts such as savings accounts, investment accounts and also retirement accounts for additional information on customer ability to repay their loans. The study suggests that same study be done in other financial institutions not considered in this study to allow generalizations and also provide rich advances for future studies. Further research is also required to study the factors determining debt recovery in financial institutions.
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This comprehensive document highlights the invaluable role that debt collection agencies play in supporting businesses across California. By outlining the various ways in which these agencies contribute to the financial health and stability of businesses, this resource offers practical insights and strategies for leveraging debt collection services to enhance cash flow, streamline operations, and promote sustainable growth within the dynamic Californian business landscape.
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Many countries have seen the importance of financial education by making financial
education a national strategy. In Vietnam, although the National Strategies for Inclusive Financial
Education has been proposed since 2017 and officially included in the National Financial Inclusion
Strategy in 2020, however, financial education is still quite new, and many people are not aware of
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Today, in the rapidly emerging globalization process, increasing the competitiveness of enterprises
depends on increasing of their firm performance. Although there are many methods and techniques affecting
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and organization learning is effective as intermediate variable to the effects of IT capabilities at firm’s
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Kirill Klip GEM Royalty TNR Gold Copper Presentation
Level of Efficiency of Collection Techniques Used By Lending Institutions in Ermita, Manila
1. International Journal of Business Marketing and Management (IJBMM)
Volume 4 Issue 12 December 2019, P.P. 46-52
ISSN: 2456-4559
www.ijbmm.com
International Journal of Business Marketing and Management (IJBMM) Page 46
Level of Efficiency of Collection Techniques Used By
Lending Institutions in Ermita, Manila
Dr. Marivic F. Flores
Associate Professor 3, College of Business and Government Management
Pamantasan ng Lungsod ng Maynila, Philippines
Cel # 09217532420/09173993769/
Abstract: This study was undertaken to determine how efficient are the collection techniques used by lending
companies in Ermita, Manila. The goal of the study was to determine the following: (1) the profile of the
respondents in terms of years of operation, average receivables, ranking of collection priorities, bases in credit
granting and bad debts avoidance strategies ? (2) the most used collection techniques adopted by the
respondents ? (3) the way the respondents deal with delinquent accounts? (4) the average receivable collection
period of the respondents? (5) the bad debts percentage of the respondents? (6) the level of efficiency of adopted
collection techniques of the respondents in consideration of their realized: a) average receivable collection
period : b) bad debts percentage? (7) significant difference on the level of efficiency of adopted collection
techniques of the respondents in consideration of their realized : a) average receivable collection period : b)
bad debts percentage? Further, descriptive research design was used in the study to know the responses of the
lending institutions on their efficiency of collection techniques . A survey questionnaires were administered to
60 lending companies operating in Ermita, Manila to obtain and acquire the needed information. . Findings
revealed that most lending companies are having a monthly average receivable of Php 1,000,000 and above and
are prioritizing due debts in collection and have been operating for more than 6 years and a monthly average
receivable amounting to P1,000,000 and above. Most of the lending companies try to avoid having bad debts by
strict terms of condition placed on their customers, setting credit limits and customer checking. In order to
collect customer payments, the lending companies follow-up their customer mainly through mails, or electronic
transactions like calls often to remind them of their obligations. Results also indicates that the lending firms
deal with delinquent and default payers by doing follow-ups once a month and calling repetitively. The firms
accumulate their clients’ debt within 60 days which indicate that they stand a 90% chance of collection. The
lending institutions are efficient in 2 out of 2 parameters which are Average Receivable in Collection Period
and bad debts percentage in measuring collection performance. Statistics shows that the accounts receivable
period is nearer to one, hence it has more impact received from the level of efficiency of collection techniques.
Further, there is no significant difference on the level of efficiency of adopted collection techniques.
Key words: Average receivable collection period, bad debt, collateral, credit cycle, credit line, delinquency,
efficiency, mode of payment.
I. Introduction
The number of companies engaged in credit lending is multiplying these days. This is because of the
reason of persistent demands of peoples’ wants and needs, car , home, renovation, medical assistance , and etc.
A crucial component in a lending business is facilitation and management of collection techniques.
Credit and collection strategies, if properly applied can help firms reduce Accounts Receivable balances and
generate a substantial one-time cash flow. (Credit and Collections, 2015). Some borrowers hold their payment
for as long as they can likely do so. This is an integral issue for lending institutions.
This study specifically seeks to measure how efficient are the collection techniques used by lending
companies in Ermita, Manila
II. Statement of the Problem
This study aims to know how efficient are the collection techniques used by lending companies in
Ermita, Manila. Specifically, the researcher ought to answer the following questions:
1. What is the profile of the lending companies in terms of:
a. Years in operation
b. Average receivables
2. Level Of Efficiency Of Collection Techniques Used By Lending Institutions In Ermita, Manila
International Journal of Business Marketing and Management (IJBMM) Page 47
c. Ranking of collection priorities
d. Bases in credit granting
e. Bad debts avoidance strategies
2. What are the most used collection techniques adopted by the respondents?
3. How do the respondents deal with delinquent accounts?
4. What is the average receivable collection period of the respondents?
5. What is the bad debts percentage of the respondents?
6. What is the level of efficiency of adopted collection techniques of the respondents in consideration of their
realized:
a. Average receivable collection period
b. Bad debts percentage
7. Is there a significant difference on the level of efficiency of adopted collection techniques of the
respondents in consideration of their realized:
a. Realized average receivable collection period
b. Bad debts percentage
III. Methodology
The descriptive method of research was used in the study to know the efficiency of collection
techniques used .A survey questionnaires were administered to 60 lending companies operating in Ermita,
Manila . The respondents are loan officers of the 60 lending companies providing service in Ermita, Manila. All
of them were given questionnaires that were checked, reviewed, and assessed in order to understand the given
queries.
IV. Results
1. Most lending companies are having a monthly average receivable of P1,000,000 and above and are
prioritizing due debts in collection and have been operating for more than 6 years and have a monthly
average receivable amounting to P1,000,000 and above. The firms prioritize collecting due debts and that
their bases in offering credit to would-be clients are the customers’ credit history and their assets, and the
companies trust and confidence with its clients.
Most of the lending companies try to avoid having bad debts by strict terms of condition placed on their
customers, setting credit limits and customer checking.
2. In order to collect customer payments, the lending companies follow-up their customer mainly through
mails, or electronic transactions like calls often, to remind them of their obligations.
3. Results indicate that the lending firms deal with delinquent and default payers by doing follow-up once a
month and calling repetitively. The non-bank lending institutions deal with delinquent payers by calling
them repetitively.
4. Most of the lending institutions collect credits in due within 31 days and more.
5. The firms prioritize collecting due debts but still suffer to a range of 6%-10% bad debts.
6. The firms accumulate their clients’ debt within 60 days which indicate that they stand a 90% chance of
collection.
The lending institutions are efficient in 2 out of 2 parameters which are Average Receivable in Collection
Period and Bad Debts Percentage in measuring collection performance.
The statistics shows that the Accounts Receivable period is nearer to one, hence, it has more impact
received from the Level of Efficiency of Collection Techniques.
7. With the result of the statistical treatment done solely to the accounts receivable, showing an F-value of
21.39221 and F-critical value of 3.932438
There is no significant difference on the level of efficiency of adopted collection techniques.
3. Level Of Efficiency Of Collection Techniques Used By Lending Institutions In Ermita, Manila
International Journal of Business Marketing and Management (IJBMM) Page 48
V. Discussion
Table 1
Frequency and Percentage Distribution of the Respondents According to Years in Operation
Year Frequency Percentage Rank
1-3 years 5 9.43% 3
4-5 years 16 30.2% 2
6 years or more 32 60.38% 1
TOTAL 53 100%
Table 1 shows that most of the lending companies in Ermita, Manila is existing for more than 6 years which
indicates that the companies manage to operate their business long. The results of the survey found out that
60.38% exist for more than 6 years, 30.3% for 4-5 years , and 9.43% for 1-3 years, and it turned out than no
lending company in Ermita, Manila is operating in less than a year. According to “Credit & Collection Seminar”
(2014) , effective and efficient managers view the credit and collection function as an overlooked profit maker.
Without added investment, improving collection adds substantially to the bottom line. Being able to extend the
right amount of credit to the right accounts can expand sales and profits at almost no expense and be able to
maintain cashflows and continue its existence.
Table 2
Frequency and Percentage Distribution of the Respondents
According to Monthly Average Receivables
Receivables Frequency Percentage Rank
P100,001-P500,000 8 15% 3
P500,001-P1,000,000 15 28% 2
More than P1,000,000 30 57% 1
TOTAL 53 100%
Table 2 presents that most of the lending companies in Ermita, Manila is having more than P1,000,000 Monthly
Average. The results of the survey found out that 57% is P1,000,000, 28% for P50,001-P1,000,000 , 15% for
P100,001-P500,000 . This implies that most lending institutions are large which means a lot of debtors resort to
borrowing. This was supported by De Luzon (2012), stated that we can expect more people wanting to borrow
money, amidst the economic crisis our nation is facing.
Table 3
Frequency and Percentage Distribution of the Respondents
According to Ranking of Collection Priorities
Frequency Percentage
Due Debts 53% 100%
TOTAL 53% 100%
Table 3 shows that most of the lending companies in Ermita, Manila is prioritizing to collect due debts, which
indicate that they give more emphasis in collecting maturing debts rather than past due debts and delinquents
debts. The result of the survey found out that 100% are due debts, and none for past due debts and bad debts.
This is supported by Credit Research Foundation (2010) which states that the primary job of the person
responsible for collections is to collect the money as close to the terms of the obligations as possible.
Table 4
Frequency and Percentage Distribution of the Respondents
According to The Bases of their Company in Granting Credit
Basis Frequency Percentage Rank
Credit History (Capacity) 53 100% 1.5
Asset (Collateral) 53 100% 1.5
Trust and Confidence
(Character)
37 70% 2
4. Level Of Efficiency Of Collection Techniques Used By Lending Institutions In Ermita, Manila
International Journal of Business Marketing and Management (IJBMM) Page 49
Table 4 reveals that most of the lending companies in Ermita, Manila is based on the customer’s credit history
and on customer’s asset in offering credit which implicates that the client should have sufficient asset and good
record of credit history. The survey found out that 100% are based on the credit history and customer’s asset,
and 70 % based on trust and confidence. This was supported by the Live Oak Banking Company (2015) that
credit analysis by a lender is used to determine the risk associated with making a loan. Regardless of the type of
financing needed, a bank or lending institution will be interested in both your business and personal financials.
Credit analysis is governed by the 5 Cs Character, Capacity, Condition, Capital and Collateral.
Table 5
Frequency and Percentage Distribution of the Respondents
According to Bad Debts Avoidance Strategies
Methods Frequency Percentage Rank
Accurate and Timely Invoicing 39 74% 2
Strict Terms and Conditions 53 100% 1
Customer Checking 53 100% 1
Setting Credit Limits 53 100% 1
By Giving Incentives / Discounts 31 58% 3
Table 5 presents that most of the lending companies in Ermita, Manila are using strict terms and conditions,
customer checking and setting credit limits as their method to avoid bad debts which indicates that they are
having policies with regard to their agreement with clients. As a rule , the longer the customer ages past due, the
more frequently you should contact them and that involves customer checking, setting credit , Credit Research
Foundation (2010)
Table 6
Frequency and Percentage Distribution of the Respondents
According to Collection Techniques
Collection Techniques Frequency Percentage Rank
Electronic Transaction 27 50.94% 1
Through Mail 20 37.74% 2
Demand Letters 6 11.32% 3
Table 6 shows that most of the lending companies in Ermita, Manila is using electronic transactions as their
major technique in collection. The results of the survey found out that 50.94% are through electronic
transactions (telephone calls, etc ) 37.74% are through mail, 6% through demand letters and none for door-to-
door. This is in relevance with the statement that telephoning is your most cost-effective collection method. It’s
fast, it gives you the opportunity to listen to what your customer has to say, and yet you are at your own desk
with access to all the information that you need. (Credit Research Foundation, 2010).
Table 7
Frequency and Percentage Distribution of the Respondents
According to Dealing with Delinquent Accounts
Delinquent Accounts Frequency Percentage Rank
Repetitive Calls to the Debtor 53 100% 1
TOTAL 53 100%
Table 7 presents that most of the lending companies in Ermita, Manila do repetitive calls to the debtor in dealing
with delinquent accounts. The results of the survey found out that 100% are on repetitive calls to the debtor.
When you are dealing with a delinquent customer, expect some emotion from them. In this case, you should
always observe good telephone manners. It’s okay to be understanding of a customer’s problems, but do not be
side tracked by small talk or taken in by “hard-luck” stories. This is supported by the article written by Credit
Research Foundation last 2010.
5. Level Of Efficiency Of Collection Techniques Used By Lending Institutions In Ermita, Manila
International Journal of Business Marketing and Management (IJBMM) Page 50
Table 8
Frequency and Percentage Distribution of the Respondents
According to Average Receivable Collection Period
Days Frequency Percentage Rank
0-15 days 5 9.43% 3
16-30 days 21 39.62% 2
31 days or above 27 50.94% 1
TOTAL 53 100%
Table 8 reveals that most of the lending companies in Ermita , Manila taking 31 days or above as their average
receivable collection period which indicates that the institutions are having more than a month before they can
collect their receivables. The results of the survey found out that 50.94% are 31 days or above, 39.62 % for 16-
30 days and 9.43% for 0-15 days of average receivables. A positive evident of this is some studies indicate that
your stand a 90% chance of collection within the first 60 days.
Table 9
Frequency and Percentage Distribution of the Respondents
According to the Estimated Percentage of Bad Debts
Percentage of Bad Debts Frequency Percentage Rank
1% - 5 % 12 23% 2
6% - 10 % 38 72% 1
16% - 20 % 3 5% 3
TOTAL 53 100%
Table 9 shows that most of the lending companies in Ermita, Manila have a 6% - 10% of bad debt which
implicates that somehow they are having a good record of the estimated percentage of bad debt. The result of
the survey found out that 72% are 6%-10% bad debt, 23% for 1%-5% and 5% for 16%-20%.
Table 10
Mean Level of How Efficient are the Collection Techniques
Of the Lending Companies
Collection Strategies Weighted Mean Interpretation Rank
Average Receivable Collection Period 4.18 Efficient 1
Bad debts Percentage 3.57 Efficient 2
OVERALL MEAN 3.87 Efficient
Table 10 reveals that the lending companies are efficient in 2 out of 2 parameters to measure collection
performance which is 100% with the mean ranging 3.57 – 4.18.
Table 11
Significant Differences in the Level of Efficiency of the Collection Techniques
In Relation to Accounts Receivable Collection Period
SUMMARY
Groups Count Sum Average Variance
Variable 1
Independent Variable
53
53
195
233
3.679245
4.396226
0.798984
0.474601
ANOVA
Source
Of Variation SS df MS F P-value F crit
1.08E-
6. Level Of Efficiency Of Collection Techniques Used By Lending Institutions In Ermita, Manila
International Journal of Business Marketing and Management (IJBMM) Page 51
Between Groups
Within Groups
Total
13.62264
66.22642
79.84906
1
104
105
13.62264
0.636792
21.39259 05 3.932438
Since the computed F-value of 21.39259 is greater than the F-critical value of 3.932438, the researcher arrive at
the statistical decision that the mean level of strategic efficiency in relation to average receivable collection
period is not the same among the lending institutions.
VI. Conclusion
Based on the empirical findings the following conclusions were drawn:
1. The lending companies try to separate those clients they know, have a capability to pay off their debts from
those that are likely to become default customers. Therefore, the researchers concluded that with strict terms
and condition of giving credit and the prioritization of due debt, most of the lending companies can
efficiently avoid uncollectable accounts.
2. The companies do follow-ups through mails/calls (electronic transactions) to remind their borrowers of
their obligations .In this sense, the researcher concluded that the use of electronic transaction allows the
lending companies to ensure that their overdue accounts will be paid.
3. With the use of systematic follow-ups of account, the lending companies were able to monitor their clients’
obligation through telephoning. This ensures that all accounts receivable will be paid and it can also allow
the company to try and revert their delinquent accounts back as receivables.
4. The lending companies have efficient collection technique because they are able to collect their receivables
only within a month or so, which can be considered as fast.
5. It can be seen that even though firms try to collect due debts, there are still a considerable percentage which
becomes bad debts, despite their efforts to collect these on time. Letting late payments languish can harm
the company’s chances of success and disrupt the firm’s cash flow. Hence, the length of total time in
structuring pay-outs should be as short as possible.
6. An efficient collection technique requires formal system that ensures overdue accounts get paid. The lower
the percentage of the firm’s bad debts, the more it shows their efficiency in collecting the accounts of their
clients.
The researchers arrive at the statistical conclusion that the level of efficiency of collection techniques
showed greater impact to the Accounts Receivable period compared with its impact to the Bad Debts
Percentage.
7. There is a significant effect to the accounts receivable collection period with accordance to the level of
collection technique used.
There is a significant effect to the bad debts percentage with regard to the level of collection technique
used. Hence, how high or how low the period of collection and the percentage of bad debts have an effect
on the efficiency of the collection technique used by the lending companies.
Acknowledgment
The author would like to express her gratitude to JSK Finance giving me the needed information in order
to finish the study.
7. Level Of Efficiency Of Collection Techniques Used By Lending Institutions In Ermita, Manila
International Journal of Business Marketing and Management (IJBMM) Page 52
References
Books:
Agamata (2009), Management Advisory Services: A Comprehensive Guide
Balkenhol, B., (2007), Lending and Public Policy: Outreach, Performance and Efficiency
Caplan, S. (2007), Streetwise Credit and Collections
Fajardo, F. and Manansala , M. (1987), Money Credit and Banking 4th
Edition
Lando, D. (2004) Credit Risk and Modeling: Theory and Application
Miranda , G . (2002), Credit and Collections Revised Edition
Websites and links:
http://www.slideshare.net/mobile/JDjesusfaith/the effectiveness-of-informal-money-lending-business-to-the-
microentrepreneurs?smtNoRedir
http://thismatter.com/money/banking/financial-institutions.htm
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