- 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.
Receivables Management-Definition,Objectives Of Receivable Management,Factors influencing the size of receivables,Dimensions of Receivables Management,Collection Methods Used
Receivables Management-Definition,Objectives Of Receivable Management,Factors influencing the size of receivables,Dimensions of Receivables Management,Collection Methods Used
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.
Receivables Management is the process of making decisions relating to an investment in
trade debtors. Certainly investment in receivables is
necessary to increase the sales and the profits of the firm.
But at the same time investment in this asset involves cost
consideration also
Financial Management Presentation on topic Receivables Management by MBA Students of the University of Hyderabad.
Madhuri 18MBMB03
Vinodh 18MBMB09
K.Priya Bharathi 18MBMB15
Isaac Livingston 18MBMB21
Bhargav 18MBMB29
A credit and collections policy is a document that includes “clear, written guidelines that set the terms and conditions for supplying goods on credit, customer qualification criteria, procedure for making collections, and steps to be taken in case of customer delinquency”.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
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how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
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@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
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Tele-gram
@Pi_vendor_247
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
1. RECEIVABLES
MANAGEMENT
CMA Dr. Kinnarry Thakkar
Ph. D., ACMA, C.S., M.B.A.(Finance), M. Com.
Associate Professor,
Department of Commerce,
University of Mumbai
2. MANAGEMENT OF RECEIVABLES
Receivable is defined as “debt owed to the firm
by customers arising from sale of goods or
services in the ordinary course of business”.
A firm requires to allow credit to its customers
for expansion of sales.
Receivables contribute a significant portion of
current assets.
3. Objectives of Accounts Receivables
Initiate collection
procedure on
Overdue accounts
Optimum investment
in Debtors
Doubtful debts reduces
profit. Receivables policy
ensures timely and hassle
free settlement of bills
1.Reduction of costs by
optimum investment
in receivables.
2. Balance between liberal
credit sales and investment
in receivables
Maximizing value
of the firm
1. By achieving trade off
between risk and return
2. Retaining old customers
& attracting new customers
4. According to Bolton S the objective of
receivable management is“ to promote sales
and profits until that point is reached where the
return on investment in further funding of
receivables is less than the cost of funds raised
to finance that additional credit”
OBJECTIVES
6. Costs of Receivables Management
1. Opportunity costs: it is the cost for arranging
additional funds to support credit sales which
could be profitably employed elsewhere.
2. Collection costs: these are cost incurred in
collecting the debts from the customers to
whom the credit sales is made. These costs
include stationery, administration expenses,
expenses incurred for collecting information
about the credit standing of the prospective
customer.
7. Costs of Receivables Management
3.Delinquency cost: It arises if customers fail to
meet their obligations on due dates. It
involves blocking up of funds for an extended
period
4. Default cost: it is the cost incurred when the
customer is not able to honor the dues of the
firm. However these can be reduced if the
firm properly evaluates the customer before
granting credit.
8. Benefits of Accounts Receivables
Management
Benefits
Increase in
Market share
Increased Sales
Increase in profits Ideal credit
policy
9. Liberal
Goods are sold to
customers whose
creditworthiness is
not up to standard
Stringent
Goods are sold on credit
on a highly selective
basis, i.e only to the
customers who are
financially sound
Credit Policy
12. OPTIMUM LEVEL OF INVESTMENT IN TRADE RECEIVABLES
Profitability
Costs &
Profitability Optimum Level
Liquidity
Stringent Liberal
13. Credit Policy Variables
• Minimum criteria for the extension of credit to the
customer
• Credit rating, credit references, average payment
period & financial ratios provide a quantitative basis
for establishing and enforcing credit standards
Credit
Standards
• It means stipulations under which goods and
services are sold
• It includes three components: Credit period,
Cash discount & Cash discount period
Credit
Terms
• It is the procedures passed to collect
amount receivables, when they become due
• It is required because all customers do not
pay on the due date
Collection
Policy
14. Collection Policy
Technique Description
Letters Initially a polite letter of overdue account is sent. Later a more
demanding letter is sent to remind the customer about payment.
Telephone
calls
If the response from the letter is not positive a telephonic conversation
requesting the payment is done. If the customer is able to give
reasonable reasons the credit period can be extended.
Personal
visits
If telephonic calls could not serve the purpose a collection person is
send requesting on the spot payment.
Collection
agencies
A firm can appoint collection agencies to collect the amount overdue.
The collection agencies can exercise all the rights necessary for
collection of amount from defaulting customers.
Legal action This is the last resort available to the firm for collection of overdue.
Legal action has different consequences, like the debtor might be
declared bankrupt and there will be remote chances of recovering the
money.
15. Steps in Credit Evaluation
1. Obtaining credit Information
2. Analyzing the information
3. Making the credit decision
16. Steps in Credit Evaluation
OBTAINING CREDIT INFORMATION:
The firm should ensure that the individual has the
capability to make payment on time. This requires
evaluation of accounts, which can be done from
(a) Internal sources & (b) External sources.
Internal source is available only for existing
customers. If an existing customer asks for
extension of credit the firm may grant credit on
the basis of the past records.
17. External sources of information
1. Financial statement
2. Bank references
3. Trade references
4. Credit rating agencies
5. Field visit
18. Analysis of Information
The general aspects of analysis include
QUANTITATIVE & QUALITATIVE analysis.
Quantitative analysis is done on the basis of
financial statements and firms past records.
Various ratios like liquidity ratio, profitability
ratio can be used. A comparison of firm’s ratios
with the standard / industry ratio helps in
identifying the credit standing of the customer.
19. Six C’s of credit
Character:
It is moral integrity &
willingness to make
payment
Capacity:
It is the ability of the
prospective customers to
pay (Cash Flow)
Capital:
It is the financial position
of the company with
special reference to net
worth and profitability
Case history:
In case of existing
customers past record
can be used
Collateral:
The type of assets the
potential customer
pledges against the credit
Conditions:
The general position of
the business, economic
conditions & competitive
factors.
20. Making credit Decision
Actual creditworthiness is compared with
standards, if actual creditworthiness is
above the standards, credit is granted.
21. Techniques of Monitoring
Accounts Receivables
1. Receivables turnover: It provides the
relationship between credit sales and debtors. It
indicates how quickly the receivables are
converted into cash.
Debtors Turnover rate = Credit sales
Average net Debtors
22. Techniques of Monitoring
Accounts Receivables
2. Average Collection period: It indicates the
time period of taken by the firm to convert sales
made into cash.
Average Collection period =
Number of days in year
Debtors turnover ratio
23. Techniques of Monitoring
Accounts Receivables
3. Aging Schedule:
The average collection period measures quality of
receivables in an aggregate manner. However aging
schedule is a statement that shows age wise grouping
of debtors. It helps in identifying slow pay debtors. It
breaks down debtors according to the length of time
for which they have been outstanding.
24. Hypothetical Aging schedule
Age Group (in
days)
Amount
Outstanding
Percentage of
Debtors to total
debtors
Less than 30 40,00,000 40
31 – 45 20,00,000 20
46 – 60 30,00,000 30
Above 60 10,00,000 10
Total 1,00,00,000 100
25. Techniques of Monitoring
Accounts Receivables
4. Collection Matrix:
It is a statement showing percentage of
receivables collected during the month of sales
and subsequent months. It helps in studying the
efficiency of collections whether they are
improving or deteriorating.
26. Hypothetical Collection Matrix
Percentage of
receivables collected
during the
April May June July August
Sales ( in lakhs) 350 340 320 300 250
Month of sales 10 12 14 11 08
First month following 30 38 40 30 34
Second month following 25 24 22 20 21
Third month following 20 26 22 19 18
Fourth month following 15 10 02 15 20
Fifth month following - - - 05 09
27. Changing Credit Standards
The firm may sometimes contemplate changing its credit policy to improve
its returns. The figure shows the effects on profit due to change in policy
Sales
Investment in
receivables
Bad debts
Increase
Increase
Increase Negative
Negative
Positive
Variable Direction of Change Effects on profits
28. FORMAT- Evaluation of Credit Policies
Present Policy Option 1 Option 2
Sales
Less : Variable Cost
Contribution
Less : Fixed Costs
Profits/ Benefits (A)
Total Costs = Variable Cost + Fixed Cost
Average Investments in Receivables
Costs of Extending Credit
1. Opportunity cost (% of Average
Investment
2. Bad debts
3. Administration costs
TOTAL COSTS (B)
Net Benefits (A –B)
29. Illustration 1
In order to increase sales from the normal level of 2,40,000 p.a., the
marketing manager submits a proposal for liberalizing credit policy as
under: The credit period allowed presently is 30 days.
The P/V ratio of the company is 33.33%. The company expects a return
on investment of 20%. Evaluate the above alternatives and advice.
Assume 360 days in a year.
Proposed increase in credit
period beyond normal 30 days
Relevant increase over
normal sales
15 days 12,000
30 days 18,000
45 days 21,000
30. Solution 1 ( )
Present Policy
30 days
Option 1
45 days
Option 2
60 days
Option 3
75 days
Sales 2,40,000 2,52,000 2,58,000 2,61,000
Less : Variable Cost 1,60,000 1,68,000 1,72,000 1,74,000
Contribution 80,000 84,000 86,000 87,000
Less : Fixed Costs Not Available N.A N.A N.A
Profits/ Benefits (A) 80,000 84,000 86,000 87,000
Total Costs = Variable + Fixed Cost
Average Investments in Debtors (As
F.C is not given, Investments=Sales
2,40,000 X
30/360 =
20,000
2,52,000
X 45/360
= 31,500
2,58,000
X 60/360
= 43,000
2,61,000
X 75/360
= 54,375
Costs of Extending Credit
1. Opportunity cost 20% of 4,000 6,300 8,600 10,875
2. Bad debts Nil Nil Nil Nil
3. Administration costs Nil Nil Nil Nil
TOTAL COSTS (B) 4,000 6,300 8,600 10,875
Net Benefits (A –B) 76,000 77,700 77,400 76,125
31. Practice Problem
Tanay Ltd gives the following information.
The variable cost is 70% of sales. The company expects a
return on investment of 25%. Evaluate the above alternatives
and advice.
Present policy
3 months
Plan I
4 months
Plan II
5 months
Sales 50,00,000 60,00,000 67,50,000
Fixed Cost 3,00,000 3,00,000 3,75,000
Bad Debts 1,50,000 3,00,000 4,50,000
32. Solution 2 ( )
Present policy
3 months
Plan I
4 months
Plan II
5 months
Sales 50,00,000 60,00,000 67,50,000
Less : Variable Cost 35,00,000 42,00,000 47,25,000
Contribution 15,00,000 18,00,000 20,25,000
Less : Fixed Costs 3,00,000 3,00,000 3,75,000
Profits/ Benefits (A) 12,00,000 15,00,000 16,50,000
Total Costs = Variable + Fixed Cost
Average Investments in Debtors (As
F.C is not given, Investments=Sales
38,00,000 X
3/12 =
9,50,000
45,00,000 X
4/12 =
15,00,000
51,00,000 X
5/12 =
21,25,000
Costs of Extending Credit
1. Opportunity cost 25% of 2,37,500 3,75,000 5,31,250
2. Bad debts 1,50,000 3,00,000 4,50,000
TOTAL COSTS (B) 3,87,500 6,75,000 9,81,250
Net Benefits (A –B) 8,12,500 8,25,000 6,68,750
33. Practice Problem
Tanay Ltd gives the following information.
The P/V ratio of the company is 30%. The company expects a
return on investment of 20%. Evaluate the above alternatives
and advice.
Present policy
20 days
Plan I
40 days
Plan II
70 days
Plan III
100 days
Sales 15,00,000 16,00,000 18,00,000 21,00,000
Fixed Cost 3,00,000 3,00,000 4,00,000 4,00,000
Bad Debts (%) 0.25 0.5 1 2.5
34. Solution ( )
Presently
20 days
Option 1
40 days
Option 2
70 days
Option 3
100 days
Sales 15,00,000 16,00,000 18,00,000 21,00,000
Less : Variable Cost 10,50,000 11,20,000 12,60,000 14,70,000
Contribution ( 30% of sales) 4,50,000 4,80,000 5,40,000 6,30,000
Less : Fixed Costs 3,00,000 3,00,000 4,00,000 4,00,000
Profits/ Benefits (A) 1,50,000 1,80,000 1,40,000 2,30,000
Total Costs = Variable + Fixed Cost
Average Investments in Debtors (As
F.C is not given, Investments=Sales
13,50,000 X
20/365 =
73972
14,20,000
X 40/365
= 155616
16,60,000
X 70/365
= 318356
18,70,000
X 100/365
= 512328
Costs of Extending Credit
1. Opportunity cost 20% of 14795 31123 63671 102466
2. Bad debts 3,750 8,000 18,000 52,500
TOTAL COSTS (B) 18,545 39,123 81,671 1,54,966
Net Benefits (A –B) 1,31,455 1,40,877 58,329 75,034