Research On Risk Management Of Enterprises Accounts Receivable

In the current sphere of market economy with fierce competition, it is difficult for businesses to survive and thrive by merely utilizing traditional marketing strategies such as enhancing product quality, lowering production cost and offering sound after-sale service. As the time requires, sales on account has emerged and developed into one of the essential means to expand sales, which brought about receivables along. Sales on account, on one hand, helps a business to improve the sales and reduce the inventory while on the other hand, generates receivables and opportunity cost as well as the chance of uncollectible debt, which in turn results in the operational and financial risks such as the substantial burden of loan due to the occupation of funds for the receivables and hence, the risks associated with receivables should not be ignored. However, owing to the fact that the credit system in China has yet to be developed and most businesses lack of the awareness of the risk-control, there has not been a mature management system to lower the risk of receivables in an efficient and effective manner.This paper, pointing to some businesses with high ratio of receivables and improper management, constitutes a practical risk management system for receivables by taking reference to the relevant research findings home and abroad. It puts forward that:pre-control shall be conducted by a series of measures such as strengthening the awareness, completing the inner-control system, standardizing the operation and enhancing product competitiveness with a credit-decision model on receivables to prevent the risk; in-process control shall be achieved through implementing the line of credit, intensifying the credit management; after-control shall be implemented by regular account checking, account analysis and multiple means to get back the receivables. In addition, this paper avails the scenario of Company Y to exemplify the status-quo of receivables management, in which reasons have been discussed and measures of control advanced for other businesses'kind reference.