Rsearch On Accounts Receivable Risk Management Of YH Construction Company

In recent years,the number of construction enterprises has increased rapidly from 58,750 in 2005 to 80,911 in 2015,with a high growth rate of 37.7%.The expansion of enterprises makes the competition among them become more intense.The characteristic of construction industry is that large amounts of funds needed to be paid in advance for a project.And credit sales are very common and become an essential way to expand the market,increase the revenue and profits.The collection of accounts receivable often encounters the problem that the customer defaults on the project payment,which makes the construction enterprise face huge risk.Therefore,the scientific and effective management of the risk of accounts receivable is of great significance to the continuous operation and healthy development of construction enterprises.Based on the related theories of the risk management of accounts receivable,this paper analyzes the characteristics of construction industry in China.Through the investigation and research on YH Construction Company,this paper points out the existing issues in risk management of accounts receivable,they are: the large proportion of accounts receivable,the poor liquidity and the large risk of major customers when applying the analysis of operating assets model.On the basis of this,the reasons are analyzed,which includes the unsound credit policy,the weak collection of accounts receivable,and the lack of dynamic monitoring mechanism,etc.According to the existing problems,combining with the characteristics of the industry,the risk identification is put forward to identify the risk;meanwhile,the risk assessment of the accounts receivable is carried out by the analytic hierarchy process(AHP)toward the YH Construction Company.This paper hypothesizes the risk assessment model of YH Company's accounts receivable.In the construction industry,the loss rate of accounts receivable has a linear correlation with the index parameters of financial factors and non-financial factors,as well as the relative quota parameters and the aging parameters of accounts receivable.The organizational structure between construction enterprises and debt party customers,controlling shareholders,management ability and credit control measures will not change in a certain period of time.On this basis,the identified risks are further subdivided by the Analytic hierarchy process(AHP)to find out the specific factors for each type of risk.In consideration of the constructed index systems are mostly qualitative indicators,such as market economic risk,decision-making risk,the expert scoring method is used to calculate the index weight,and the financial risk index is calculated from the financial statements of the company,and the Wale's scoring method is used to calculate financial indicator.Finally,the evaluation results are obtained by combining qualitative and quantitative indicators,it reveals that the comprehensive risk value of the company's accounts receivable is 1.8,which belongs to the medium level of risk;the ranking of risks,from high to low,is customer credit risk,decision-making risk,organization risk,financial risk,policy risk,market economy environment risk,technology risk.This result indicates the objects enterprises should focus on in risk management,whereby to better deal with risks.Finally,the paper suggests that the risk management of accounts receivable should be adopted in the entire operation process of enterprises,which includes pre-,in and post-management,to reduce the risk of recovery of accounts receivable.As a result,the credit sales model of accounts receivable is more conducive for the construction enterprises to increase revenues.