Study On Accounts Receivable Management Strategies Of DD Company

Accounts receivable is a credit’s right. Refer to money which is owned to a company by a customer for products or service on credit selling. It is often treated as a current asset on a balance sheet. But if it has not been managed properly, it will impact company’s cash flow and profit achieving. Even may result in bankruptcy with profitability. Thus account receivable plays an important role in the development of a company. However credit risks control that how to keep good balance between increasing revenue and controlling risk is the key point in account receivable management. No matter which stage one company is in. the company needs to consider how to achieve the best interest by focusing on account receivable management. It’s a critical subject in a company.Through referring to Chinese and international theories and best practices on company’s account receivable management. The author thinks that an effective account receivable management procedure and method are based on industry composition and company’s characteristics. It’s very important for company to establish a suitable model which can meet the company’s characteristics instead of mechanically copying above theories and practices. In order to achieve this purpose, it is absolutely necessary to set up a complete credit risk control process. Having an effective credit risk control management process will be benefit the company on improving risk prevention ability and reducing overdue and write off. Also it can help the company to reduce capital cost and improve efficiency of capital allocation.This paper provides relevance between the management performance and risk control of account receivables based on the study of DD Company’s (Japan) situation. Starting from theories of account receivable management and risk control, the author thinks that we should understand and choose those theories which are related to a company’s daily management works in width and depth and continue to improve the management theories. In this way, it will help DD company to analyze company’s characteristics and identify the problems then improve company’s account receivable work better. This solution can be executed in practical work. Meanwhile since DD is a typical IT company, it’s useful in some aspects to other companies as well.