Accounts Receivable Risk Management

In the modern economy society, the most trade is based on credit. The trade credit is the most efficient means of settlement in enlarging the market, reducing the whole cost of the business, strengthening the power of the competition, and etc. However, with the development of the trade credit, a serious problem of accounts receivable emerges. Because of selling on trust blindly, many corporations have got excessive accounts receivable, among which many are bad and can not be reclaimed. As a result, these corporations are lack of sufficient cash,and can not survive,in the end,they go bankruptcy. Many cases from home and overseas corporations indicate that the power of the risk on accounts receivable is startling in destroying the vitality of the corporations.Except for the influence of the situation of the society credit,the most important reason for the corporations suffering from the risk on accounts receivable is the absence of controlling. Selling on credit can bring the corporations a mass of revenue in their financial statements,while the accounts receivable are not necessarily the real value. Meanwhile the accounts receivable are not only engrossing lots of mobility capital, but also let a lot of cash flow out of the corporations and enlarge the difficulty of cash flowing. It will make the corporations into distress if this condition continues. So the corporations must pay attention to the risk on their accounts receivable,and learn how to analyze the risk and control it.On the basement of studying the reasons which cause the risk on the accounts receivable, this paper puts forward that the corporations must pay attention to prevent the risk on the accounts receivable firstly if they want to control it. The paper firstly constructs a financial affairs early warning model,...