Research On The Distress Of Zoomlion’s Account Receivable Based On The Background Of Overcapacity

Abstract:Engineering Machinery Manufacturing Industry is the basic pillar industry of a nation, the development level of which is an important criterion of a country’s industrialization and economic power. Over the past few years, this industry has entered a golden era of development But with the financial crisis and continuous economic downturn, the market demand of Engineering Machinery Manufacturing Industry is insufficient and phenomenon such as productivity surplus also occurred. Because of projects shrinking, the tightening monetary policy and the decreasing downstream enterprise funds, the shortcomings of the industry’s sales model are gradually exposed, making the engineering machinery manufacturers fall into a distress where the account receivable is quite highBased on the case of Zoomlion, this thesis firstly analyzes the actual state of enterprise’s account receivable and its impact on cash flow and the quality of profit, involving a number of financial indicators such as the account receivable turnover rate. Then combining both internal and external factors to dig into the underlying reasons of the distress of Zoomlion’s account receivable. The internal factors are as following: inadequate control of account receivable, aggressive credit sales mode and the business strategy with scale expansion. The external factors are composed of overcapacity of Engineering Machinery Manufacturing Industry and serious product homogeneity.From the analysis of the distress of Zoomlion’s account receivable, we conclude that we should take many measurements to solve the problem. Good management of account receivable contributes to reduce bad debts losses and improve the quality of profit. As marketing is the key factor to convert products into cash, Zoomlion could take advantage of the idea marketing, change the marketing concepts of salespersons, which can avoid irrational promotion. In order to increase customer share, the enterprise could uncover the requirements of clients, strengthen management in after-sales service, and improve customer satisfaction and loyalty. Technology innovation is the key to the shift from demand to reality; products intelligentization and concern on energy conservation and environmental protection can contribute to achieve the goal of product differentiation. And to expand the market can absorb its excessive capacity. Wish the above suggestions can help Zoomlion solve the distress of account receivable.