Research On Accounts Receivable Management Of H Construction Company

In the macroscopic context of the COVID-19 outbreak,economic downturn,and the shocking news of huge debt of real estate companies represented by Evergrande,construction enterprises are subject to multiple factors including the macro-economy,policy regulation and debtor defaults in their recovery of claims,while facing tight cash flow,poor liquidity,and prominent financial risk.Focusing on H construction company,through a review of theories of accounts receivable management,the operating and financial conditions of H company are analyzed:(i)there was a large gap between H company and other companies in the same industry in operating scale,profitability and accounts receivable turnover;(ii)H company witnessed a significant increase in its operating revenue accompanied by a sharp increase of account receivable therewith,with its account receivable turnover in2021 being 0.6 times lower than the industry average;(iii)there were existing problems with H company’s management of accounts receivable such as poor quality,and profitability lower than the industry average as constrained by accounts receivable.It seemed urgent for H company to improve the effect and efficiency of accounts receivable management.On top of the review of theories of accounts receivable factoring,the situation of accounts receivable factoring in H company is introduced.Advantages of its self-managed factoring are clarified such as covering shareholders and supply chain business scenarios,compliance,and risk control.In the meantime,the following disadvantages are pointed out: to-be-improved marketization,wanting a high-quality talent team,high capital cost and pricing of service,being unable to formulate accounts receivable statements,and insufficient risk tolerance in business development.Based on analysis of the accounts receivable management status in H company,the following suggestions for optimization thereof were made herein:(i)optimize the front-end management of accounts receivable(i.e.,ex ante management of accounts receivable)such as system implementation of account receivable management and customer selection as well as the contract terms concerning accounts receivable,thus optimizing the management at the source;(ii)track debtors status,focus on account receivable collection and process transfer,improve the middle management(i.e.,in-the-process management)in the intelligent and digitalize management of accounts receivable,enhance the efficiency of accounts receivable turnover and realization;(iii)establish a special work mechanism for accounts receivable collection and assessment of performance in accounts receivable management,fully mobilize and utilize resources for accounts receivable collection,speed up accounts receivable realization,and strengthen the back-end accounts receivable management(i.e.,ex post management of accounts receivable).In this paper,according to analyze the accounts receivable management status in H company,the suggestions for optimization of accounts receivable management made for H company are expected to enrich the efficiency of accounts receivable management and assets operation,also improve anti-risk capability and management quality.Meanwhile,this research provides a useful reference for the accounts receivable management in the construction industry as a whole.