Research On The Accounts Receivable Management Problem Of H Company

With a growing globalization, it is more difficult for enterprises to improve sales in a highly competitive market. In a situation like this, credit sales are becoming more and more popular. When a credit sale is made, buyers can get goods on credit while they are short of cash. This will improve sellers’ sales as well as increase their risk. If sellers cannot get paid on time, receivables will become doubtful or even bad. Bad debts may lead to cash flow shortage which is usually a main reason for enterprises’ bankruptcy. H Company is a high-tech company and is currently in a rapid development. Along with a growing overseas market expansion, its accounts receivables also increased in the past years. As a result, accounts receivables management has become an important issue for this company.This paper makes an analysis based on H Company’s past experience in managing receivables. The analysis consists of 5 parts.(1) A financial data analysis for the past 5 years.(2) A comparison analysis among H Company’s receivables and AL Company’s receivables as well as ZX Company’s receivables.(3) An aging analysis for H Company’s accounts receivables.(4) A risk analysis for H Company’s bad debts.(5) A connections analysis between H Company’s sales increase and its receivables increase. The paper also makes a statement on H Company’s successful experiences. These include :( 1) H Company built a global financial management center and stipulated common standards in this area.(2) H Company organized a professional team in dealing with receivables issues.(3) H Company provided allowance for bad debts timely and accurately.