Study Of Receivables Management In Construction Companies

With the continuous development of China’s market-oriented economy, the competition among construction companies is intensifying in the environment of modern commercial competition. In order to undertake projects, improve competitiveness, expand market share, and increase production value and profit, construction companies always relax the construction conditions and credit policies of contract at all costs. This practice would result in the companies’ receivables and advance funds staying at a high level, which not only goes against the withdrawal of funds, but also brings high financial and operational risks to the companies.Meanwhile, because the market credit system, and the relevant laws and regulations and the supervision and restraint system are not yet perfect in China, defaults by owners happen frequently. This brings about overdue receivables with varying amounts in construction companies, and some of them have been overdue for a long time. These overdue receivables would not only bring the risk of bad debts to the companies, but also cause difficulties in capital turnover and thus threaten the companies’ normal operation and development.Based on the relevant theories of receivables management, this thesis studied the formation of construction companies’ receivables, the problems facing them, and their control measures, expounded the establishment of receivables management system for construction companies and the methods for overall control, and underlined that construction companies shall strengthen the source control, mid-term management, and subsequent collection in receivables management. In addition, by combining with Company A(a construction unit)’s practice in receivables management, it made an in-depth analysis of Company A’s receivables management and put forth an improvement plan for it. At last, the thesis put forward some specific suggestions for the improvement of receivables management in construction companies.