Principles of accounts receivable management. Accounts receivable management Basic principles of accounts receivable management

Accounts receivable represents the amount of debts owed to an organization from legal entities and individuals as a result of economic relations between them or the diversion of funds from the organization’s turnover and their use by other organizations or individuals. Classification of accounts receivable:

1) for educational reasons:

· Justified debt is associated with normal timing of document flow, i.e. this is a debt whose repayment period has not yet arrived or is less than 1 month;

· Unjustified accounts receivable associated with errors in document preparation, violation of contract terms, etc.;

· Bad debt These are bills that customers have not paid. They are written off as losses after the statute of limitations expires.

2) by balance sheet items: buyers and customers; bills receivable; subsidiaries and dependent companies; advances issued; other debtors.

3) according to the timing of its formation: Short term(payments are expected within 12 months after the reporting date); Long-term(more than 12 months).

Factors affecting accounts receivable:

1) External: the state of the economy, the state of payments in the country, the effectiveness of monetary policy, the level of inflation, seasonality of production, market capacity, the degree of its saturation;

2) Domestic: credit policy of the enterprise, types of calculations used, and in particular those guaranteeing payment, state of control, etc.

The following can lead to an increase in debt: Incorrect establishment of terms and conditions of loans; no discounts; errors in assessing the solvency of clients; unaccounted risks, etc.

The problem of managing accounts receivable has worsened in recent years due to the slowdown in payment turnover between enterprises. Debt management should be an integral element of the overall working capital management policy of the enterprise and correspond with its other elements. In addition, debt management should be closely related to the marketing policy of the enterprise.

Analysis and control of accounts receivable can be carried out using absolute and relative indicators over a number of quarters or years, the most important of which are the following:

1) Collection ratio allows you to determine when and in what amount cash is expected to be received from sales of a given period. It expresses the percentage of expected cash receipts from sales in a certain interval, starting from the moment the product is sold:

KINK = change in the amount of accounts receivable in the interval n / sales of month t

N – the first month of shipment of goods;

T – 1st, 2nd, 3rd, ..., nth month.

2) Accounts receivable turnover ratio:

KODZ = revenue from product sales / average amount of receivables

3) Receivables repayment period:

Repayment period = 365 / accounts receivable turnover ratio

4) Accounts receivable collection ratio:

KPDZ = average amount of accounts receivable for the period / sales revenue

The results of calculations using the above formulas can be used in the subsequent development of individual aspects of the enterprise’s credit policy.

Methods for managing and reducing accounts receivable:

1) monitoring the status of accounts of overdue receivables;

2) ranking debtors in order to identify debtors who account for a large share of overdue debt;

3) analysis of debt by type of product in order to identify unprofitable goods from the point of view of collection;

4) assessing the real value of securities and accounting for the possibility of its sale;

5) work with debtors, including work using extrajudicial procedures;

6) control over the status and balanced changes in receivables and payables;

7) diversification of buyers;

8) optimization of credit policy;

9) development of measures to motivate sales personnel;

10) incentives for early payment for products;

11) encouraging timely payment for products through the introduction of a system of incentives and a system of sanctions for late payment, etc.

Methods for refinancing accounts receivable : Factoring; accounting and pledge of bills; forfaiting; other forms of its short-term financing

When studying the composition of accounts receivable, special attention is paid to the analysis of data on reserves for doubtful debts and actual losses associated with the non-repayment of this debt.

Add. material:

Many Russian enterprises bear serious risks when faced with the problem of insolvency and unreliability of their partners. Due to the growth of accounts receivable, a shortage of working capital arises, and this already threatens the solvency of the company itself.

The problem of non-payments is relevant not only for Russia, but also for most foreign countries. The only important difference is that there are well-established methods for managing receivables abroad. Russian enterprises, in most cases, are characterized by ineffective planning of the required amount of working capital, including accounts receivable, their irrational use, as well as shortcomings in the organizational structure of companies. This further highlights the need for accounts receivable management.

Therefore, heads of business entities and financial managers have to decide The following tasks:

Selection of sales conditions that ensure guaranteed receipt of funds;

Limiting the acceptable level of accounts receivable;

Determining discounts or allowances for different groups of buyers;

Acceleration of debt collection;

Reducing budget debts;

Assessment of lost profits from non-use of funds frozen in accounts receivable.

These problems are solved by the receivables management policy. Such a policy, as part of the overall working capital management policy, is to optimize the overall size of this debt and ensure its timely collection.

The purpose of accounts receivable management can be considered optimization of its value, since the enterprise is negatively affected by both an increase in the size of receivables and its sharp decrease.

So, on the one hand, receiving payments from debtors is sometimes a significant source of funds for the enterprise, and a sharp decrease in accounts receivable can be a negative signal indicating a decrease in sales volumes (loss of product buyers or a reduction in sales on credit). On the other hand, enterprises are not interested in the growth of accounts receivable, since it represents a diversion of funds from circulation and, as a result, the need to attract additional resources to timely repay their obligations increases.

Accounts receivable must be managed at all stages of business activity, from pre-contractual procedures to the execution of contractual transactions.

At all stages of business activity it is necessary:

· constantly monitor the ratio of accounts receivable and accounts payable, since a significant increase in debt poses a threat to the financial stability of the enterprise;

· promptly identify unacceptable types of receivables, which include shipped goods not paid on time, suppliers and buyers for claims, debt for calculations of compensation for material damage, under the article “Other debtors”;

· predict the receipt of funds from debtors based on collection ratios;

· assess the real value of existing receivables.

But in practice, it may turn out that enterprises themselves cannot ensure the return of receivables or maximize them and minimize possible losses. In these cases, measures may be taken for pre-trial debt collection, insurance protection or factoring operations.

Pre-trial recovery measures include:

– concluding an agreement with private companies that use various debt collection technologies, mainly of an “informational” nature, the procedure for using which must be agreed upon with the customer;

– insurance as a way to minimize possible losses. This action is aimed against unexpected losses of bad debt. In the credit insurance decision-making process, it is necessary to evaluate the expected average bad debt losses, the company's financial ability to withstand these losses, and the cost of insurance;

– factoring operations represent the sale of rights to collect receivables. The factoring company undertakes to immediately pay about 80% of the cost of supplies and pay the remaining part (minus interest on the loan) within strictly established periods, regardless of the receipt of revenue from debtors. At the same time, it is necessary to evaluate whether the factoring operation will lead to net savings.

All of the above techniques and methods for managing accounts receivable relate mainly to normally functioning enterprises. But accounts receivable management also takes place in companies in crisis.

An enterprise seeking to overcome the crisis must competently monitor accounts receivable and develop systems of contractual relationships with counterparties using flexible terms and forms of payment, such as issuing an interim invoice, using flexible prices, a bank guarantee, etc.

In order to eliminate the consequences of a crisis, businesses sometimes need drastic and often shocking measures. Thus, one of the ways to refinance assets is the sale or exchange of receivables (change of persons in obligations, financing under the assignment of claims, factoring operations), which is inappropriate without a preliminary assessment of the value of receivables, since the company will not be able to realistically assess the benefits and effect of the measures taken .

Summarizing the above, it is necessary to once again emphasize the need and importance of accounts receivable management. At the same time, decisions made during ongoing management should be based on an assessment of the effectiveness of various methods for its optimization, as well as on an assessment of the real value of receivables.

Add. material (2):

Accounts receivable management

As the financial crisis develops, the problem of non-payments by customers becomes more acute for enterprises. A large volume of accounts receivable significantly increases the need for borrowed capital, increases costs, reduces the profitability of the enterprise, and may cause its bankruptcy.

Typical accounts receivable management problems:

Lack of practice in assessing the creditworthiness of buyers and the risks of turning receivables into bad debts,

Lack of analysis of transactions with commercial loans to buyers,

Lack of information about the repayment period of the debt,

Lack of information about the costs caused by the increase in accounts receivable,

Lack of regulations for the enterprise’s work with accounts receivable,

Decentralization of information flows of departments working with accounts receivable (the functions of making decisions on granting a commercial loan, collecting debts and analyzing results are divided into different departments).

Main areas of work on accounts receivable management:

Planning of accounts receivable for the enterprise.

When drawing up a budget, a limit on receivables for the enterprise is formed, broken down into limits for divisions, areas, regions, departments, types of goods and services, etc.

Collecting information about customers, managing credit limits.

A typical case is when a new client is offered to make purchases on an advance payment basis. As the relationship with the buyer develops, taking into account his attractiveness as a client, the option of a commercial loan is considered.

Accounts receivable control.

It is necessary to generate a daily report on the client’s current debt, correlating data on payment and shipments made (services provided). If payment is not received on time, the sales department must be informed and if the debt cannot be settled within a reasonable time, the client is included in the list of defaulters for whom shipments (provision of services) without prepayment are not possible.

Motivating sales staff.

Sales employees are interested in executing an individual plan, and accounts receivable management is one of the tools in achieving this goal. A sales department or employee who provides high financial performance may receive an increase in the accounts receivable limit as an incentive, and vice versa.

If a business has more than 10 shipments per day and more than 100 customers, then managing accounts receivable using Excel and the phone is extremely difficult. The main problem is the low speed of providing the final result and dependence on the human factor. Information systems have all the necessary functionality for providing information for the purpose of managing accounts receivable, which allows you to increase the speed of data processing, automatically process data on payments and shipments, and provide the necessary information to all interested employees. In addition, such a system reduces the risk of employee fraud for the purpose of shipping without advance payment to a fly-by-night company.

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MOSCOW HUMANITIES AND ECONOMICS INSTITUTE

Nizhny Novgorod branch

Faculty of Economics and Management

Coursework in Financial Management

"Enterprise accounts receivable management"

Completed by: 4th year student

FOP-05 group

Nabieva E.G.

I checked

Mikheeva E.Z

Nizhny Novgorod 2009

Introduction

Chapter 1. Accounts receivable as part of the financial resources of an enterprise

1.3 Accounts receivable management methods

Chapter 2. Analysis of receivables of OJSC "CMD"

2.1 Brief characteristics of OJSC "TsMD"1

2.3 Analysis of the credit policy of OJSC "CMD"

2.4 Main directions for improving the management of receivables of the company

Chapter 3. Improving enterprise cash management

Conclusion

Literature

Introduction

In the process of financial and economic activities, an enterprise constantly has a need to carry out settlements with its counterparties, the budget, and tax authorities. When shipping manufactured products or providing some services, an enterprise, as a rule, does not receive money in payment immediately, i.e. it essentially lends money to buyers. Therefore, during the period from the moment of shipment of products to the moment of receipt of payment, the enterprise’s funds are immobilized in the form of accounts receivable, the level of which is determined by many factors: the type of product, market capacity, the degree of market saturation with this product, the terms of the contract, the payment system adopted at the enterprise, etc. The latter factor is especially important for the financial manager.

The main types of payments for delivered products are sales for cash and in the form of non-cash payments. A stable economy is dominated by non-cash payments carried out using checks, bills of exchange, non-cash transfers on current and current accounts, a system of correspondent accounts between various banks, as well as clearing offsets of mutual claims through clearing houses. In an unstable economy, prepayment becomes the predominant form of payment.

We believe that now, in a financial crisis, when many companies are not able to pay off their obligations, therefore, other companies have growing accounts receivable and, at the same time, the risk of bankruptcy, the topic chosen for study is the most relevant.

An acute issue facing all enterprises at present is one that is directly related to settlement and payment transactions and, as a consequence, to the analysis of accounts receivable.

Accounts receivable is truly one of the most pressing topics for business entities in a developing market economy.

When carrying out entrepreneurial activities, participants in property turnover assume that as business transactions are carried out, they will not only return the invested funds, but also receive income.

However, in real practice, especially with the transition to market relations and a decline in production, situations often, or rather constantly, arise when, for one reason or another, an enterprise cannot collect debts from counterparties. Accounts receivable “hang” for many months, and sometimes even years. An increase in accounts receivable worsens the financial condition of enterprises, and sometimes leads to bankruptcy.

Being part of working capital, namely part of the circulation funds, accounts receivable, and especially unjustified “hanging” ones, sharply reduce the turnover of working capital and thereby reduce the income of the enterprise.

Therefore, today the most important problems, the solutions of which should help improve the financial condition of business entities, are:

Correct organization of accounts receivable accounting in connection with the transition to a new chart of accounts and a new accounting system, as well as in connection with the termination of almost all inter-business relations after the collapse of the administrative-command management system;

Analysis of receivables, which should be aimed at identifying factors influencing the growth of receivables and determining reserves aimed at eliminating unjustified, “hanging” debt and reducing its growth.

The purpose of this work is to study the basic principles of the theory of accounts receivable analysis and organizational principles, knowledge of which allows for more targeted and successful analysis and solving issues of accounts receivable management. These questions are fleshed out in the first chapter. In the second, practical part, using the example of a specific enterprise (JSC Central Moscow Depository), an analysis of receivables was carried out, and the main directions for improving the management of the company's receivables were proposed. The third chapter provides recommendations for the most effective money management.

Accounts receivable management methods used in this work include: ranking accounts receivable by age; compiling a register of “aging” accounts receivable; forecasting the likely amount of bad receivables; determination of weighted “aging” of accounts receivable; development of credit conditions; “3 C” credit analysis method; decision tree method; assessment of the possibility of factoring and bill accounting.

CHAPTER 1. ACCOUNTS RECEIVABLE AS PART OF THE FINANCIAL RESOURCES OF THE ENTERPRISE

Every sales professional has faced the problem of managing accounts receivable.

It would seem that what is so difficult here? There is an agreement with the buyer, payment must be received in “X” days, the accounting program issues a report of who owes and how much, when the payment day arrives.

In reality, it turns out that it is not so simple: continue shipments to the client or wait until he pays off the old debt; what receivables limit should be set for each client, taking into account the specifics of his work; the manager “asks” for the client, his arguments are beautiful and convincing, but there is a feeling of anxiety that you will step on the same rake; there are hundreds of clients - how to remember the history of working with each one; you have to make a decision, the cost of the decision is the profit earned or the money lost. These situations arise daily and take up time, energy, and resources. Every management decision is a choice. Select from two or more options.

1.1 Economic essence and structure of receivables

All firms try to sell goods with immediate payment, but competitive requirements force them to agree to deferred payments, resulting in accounts receivable.

Accounts receivable are amounts of money owed to the company by customers.

Accounts receivable is an important part of current assets, also called accounts receivable, and has a direct impact on the cash position and payments.

Accounts receivable are an important component of working capital. When one enterprise sells goods to another enterprise or organization, it does not mean that the goods will be paid for immediately. Unpaid invoices for delivered products (or invoices receivable) constitute the majority of accounts receivable. A specific element of accounts receivable is bills receivable, which are essentially securities (commercial securities). One of the tasks of a financial manager for managing accounts receivable is to determine the degree of risk of customer insolvency, calculate the forecast value of the reserve for doubtful debts, and provide recommendations for working with actually or potentially insolvent customers.

Accounts receivable are one of the types of assets of an organization that can be sold, transferred, exchanged for property, products, results of work or provision of services.

In its economic essence, accounts receivable are funds temporarily diverted from the turnover of the enterprise. It's just money. Money that an enterprise, in theory, has, but not “in cash”, but in the form of obligations, expressed in one form or another. Money, whatever it is, is also a commodity. And the goods, as you know, can be sold. The question is whether such a transaction can be carried out, whether there is a buyer for this product and how feasible such a sale is, in particular, in comparison with other debt collection options. Depending on the size of the receivables, the most likely timing of their repayment, as well as the probability of non-repayment of the debt, we can draw a conclusion about the state of the organization’s working capital and its development trends.

The main factor determining the financial position of an enterprise is the state of its working capital and one of the elements - accounts receivable.

Working capital (working capital) is part of the enterprise's capital invested in its current assets. According to material characteristics, the composition of working capital includes: objects of labor (raw materials, materials, fuel, etc.), finished products in the warehouses of the enterprise, goods for resale, cash and funds in settlements.

Accounts receivable belong to the second group of working capital “Circulation Funds”.

The responsibility to monitor the completeness and timeliness of payments and the status of accounts receivable lies primarily with the enterprise itself. For these purposes, a special division of the financial service is provided in the structure of the management personnel.

Based on the nature of their formation, accounts receivable are divided into normal and unjustified. Normal debt of an enterprise includes debt that is due to the progress of the enterprise’s production tasks, as well as current forms of payment (debt on claims made, debt owed to accountable persons, goods shipped for which payment has not yet arrived). Unjustified receivables are debts that arose as a result of violations of accounting and financial discipline, weakening of control over the supply of material assets, the occurrence of shortages and thefts (goods shipped but not paid on time, debt due to shortages and thefts).

A receivable is a future economic benefit embodied and associated with legal rights, including the right of ownership. According to Article 128 of the Civil Code of the Russian Federation, receivables are recognized as property.

The asset “accounts receivable” has three essential characteristics:

1) it embodies future benefits that provide an increase in funds;

2) represents resources managed by an economic entity.

3) rights to benefits or potential services must be legal or have legal evidence of the possibility of obtaining them. For example, when reflecting the fact of the sale of an asset, the seller generates receivables. The sales agreement allows you to determine the likely future benefit.

Non-payments, an economic crisis, are the initial cause of the receivables liquidity problem. But this is not all the prerequisites that create the problem of growth in accounts receivable.

The receivables quality indicator determines the probability of receiving the debt in full, which depends on the period of debt formation. Practice shows that the longer the period of receivables, the lower the probability of collection. According to Article 96 of the Civil Code of the Russian Federation, the general limitation period is three years. It should be borne in mind that the legislation also provides for special limitation periods, both shortened and longer than the general period (for example, Article 797 and Article 966 of the Civil Code of the Russian Federation).

Based on the structure of accounts receivable, the timing of occurrence and repayment, the reasons for their occurrence and business partners, one can judge the effectiveness of the organization’s use of available funds, the rationality of the terms of concluded contracts and a number of other indicators.

The significant share of accounts receivable in the composition of current assets determines their special place in assessing the turnover of working capital. The amount of accounts receivable is affected by:

1. Sales volume and the share of sales in them on terms of subsequent payment. As revenue (sales volume) grows, as a rule, accounts receivable balances also grow.

2. Terms of settlements with buyers and customers. The more preferential payment terms are provided to buyers (increasing terms, reducing requirements for assessing the reliability of debtors), the higher the balance of receivables.

3. Accounts receivable collection policy. The more active the company is in collecting receivables, the smaller its balances and the higher the “quality” of receivables.

4. Payment discipline of buyers. The objective reason determining the payment discipline of buyers and customers should be the general economic condition of the industries to which they belong. The crisis state of the economy, mass non-payments significantly complicate the timeliness of payments, lead to an increase in the balance of unpaid products, and instead of cash, surrogates are used as means of payment. Subjective reasons are determined by the terms of the loan and the measures taken by the company to collect receivables: the more favorable the terms of the loan, the lower the payment discipline of debtors.

5. The quality of accounts receivable analysis and consistency in the use of its results. If the state of analytical work at the enterprise is satisfactory, information should be generated on the size and age structure of accounts receivable, the presence and volume of overdue debt, as well as on specific debtors, the delay in settlements with which creates problems with the current solvency of the enterprise.

There are always benefits associated with maintaining a large cash reserve - it reduces the risk of running out of cash and makes it possible to satisfy the requirement to pay the tariff before the statutory deadline. On the other hand, the costs of storing temporarily free, unused funds are much higher than the costs associated with short-term investment of money in securities (in particular, they can be conditionally taken in the amount of lost profit for a possible short-term investment). Thus, the financial manager needs to decide on the optimal cash holding.

1.2 The impact of accounts receivable on the financial results of the enterprise

When developing a payment policy, an enterprise proceeds from a comparison of the profit additionally received by easing payment terms and, consequently, increasing sales volumes, and losses due to an increase in accounts receivable.

An increase in accounts receivable initiates additional costs for the enterprise for:

Increasing the volume of work with debtors (communications, business trips, etc.);

Increasing the receivables turnover period (increasing the collection period);

Increase in losses from bad accounts receivable.

Easing the terms of a commercial loan may include increasing the loan term for new consumers. Obviously, in this case, traditional consumers will also increase the payment period for commercial bills.

Collection ratios have become widespread in the management of accounts receivable (in the formation of sales conditions policy). Collection ratios are the share of revenues from debt of a certain period in relation to the volume of sales during the period the debt arose.

The level of accounts receivable is determined by many factors: type of product, market capacity, degree of market saturation with this product, the payment system adopted by the enterprise, etc. The last factor is especially important for the financial manager.

The main types of payments are cash sales and credit sales. In an unstable economy, prepayment becomes the predominant form of payment.

Payment for cash can be made in rubles, using a credit card or debit card. A credit card is a plastic card indicating the owner's name, assigned code, personal signature and card expiration date. The cardholder can make purchases within a certain amount agreed upon when issuing the card, even if at the time of purchase it exceeds the balance in his account. Unlike a credit card, a debit card does not allow you to pay for purchases if there are no funds in the buyer’s account. In Russia, some large domestic banks have already begun issuing credit cards.

Non-cash payments are carried out using payment orders (an order from a business entity to its bank to transfer a specified amount to another business entity), payment requests (the seller’s request to the buyer to pay for the goods delivered to him under the contract), letters of credit (an order to the supplier’s bank made by the buyer through his bank, about payment of supplier invoices immediately upon receipt of documents on the shipment of products), settlement checks (a document containing an instruction from the drawer to the bank to pay the specified amount to the bearer of the check).

Analysis and management of receivables is of particular importance during periods of inflation, when such immobilization of own working capital becomes especially unprofitable. Some methods of managing debt in an inflationary environment will be discussed below.

Accounts receivable management primarily involves monitoring the turnover of funds in settlements. The acceleration of turnover in dynamics is considered as a positive trend. The selection of potential buyers and the determination of the terms of payment for goods provided for in contracts are of great importance.

The selection is carried out using informal criteria: compliance with payment discipline in the past, the buyer’s forecast financial capabilities to pay for the volume of goods requested by him, the level of current solvency, the level of financial stability, the economic and financial conditions of the selling enterprise (overstocking, degree of need for cash, etc.). P.). The information necessary for analysis can be obtained from published financial statements, from specialized information agencies, and from informal sources. Regular customers usually pay for goods on credit, and the terms of the loan depend on many factors.

Control over receivables includes ranking receivables according to the timing of their occurrence; the most common classification provides the following grouping (days): 0-30; 31-60; 61-90; 91-120; over 120. Other groupings are also possible. In addition, it is necessary to control bad debts in order to create the necessary reserve.

Analysis and control of the level of receivables can be carried out using absolute and relative indicators, considered in dynamics. In particular, monitoring the timely repayment of debts by debtors is of significant interest. To do this, in addition to the indicators of the presence of overdue receivables given in Form L-5 “Appendix to the Balance Sheet”, you can use the receivables repayment ratio, which is calculated as the ratio of the average receivables for core activities (settlements with debtors for goods, work and services; settlements on bills received; advances issued to suppliers and contractors) to proceeds from sales. The value of this indicator depends on the type of contracts prevailing at a given enterprise: for example, if the main standard contract provides for payment within two weeks from the date of shipment of the goods, then the critical value of the coefficient is 1/26. Thus, if the calculated value of the ratio exceeds 1/26, we can conclude that the company has problems with its debtors.

The most common methods of influencing debtors to pay off debts are sending letters, telephone calls, personal visits, and selling debt to special organizations.

Thus, accounts receivable management is part of the overall management of current assets and the marketing policy of the enterprise, aimed at expanding the volume of product sales and consisting in optimizing the overall size of this debt and ensuring its timely collection. At the heart of a firm's skilled accounts receivable management lies financial decision-making on the following fundamental issues:

· Accounting for accounts receivable at each reporting date;

· Diagnostic analysis of the state and reasons why the company has a negative situation with the liquidity of accounts receivable;

· Development of an adequate policy and introduction into the practice of the company of modern methods of managing receivables;

· Monitoring the current status of accounts receivable.

The accounts receivable management policy is part of the overall policy of managing current assets and the marketing policy of the enterprise, aimed at expanding the volume of product sales and consisting in optimizing the overall size of this debt and ensuring its timely collection.

The objectives of accounts receivable management are:

Limiting the acceptable level of accounts receivable;

Selection of sales conditions that ensure guaranteed receipt of funds;

Determining discounts or allowances for various groups of customers in terms of their compliance with payment discipline;

Acceleration of debt collection;

Reducing budget debts;

Assessment of possible costs associated with receivables, that is, lost profits from non-use of funds frozen in receivables.

The quality of receivables is also assessed by the proportion of the bill of exchange form of payment in it, since the bill is a highly liquid asset that can be sold to a third party before its maturity date. A promissory note has significantly more force than a regular receivable. An increase in the share of bills received in the total amount of receivables indicates an increase in its reliability and liquidity.

The problem of accounts receivable becomes particularly relevant in conditions of inflation, when money depreciates. To calculate the company's losses from late payment of bills by debtors, it is necessary to subtract its amount from overdue receivables, adjusted by the inflation index for this period.

At the present stage of business development, organizations, enterprises, and individual entrepreneurs are faced with unscrupulous partners and non-repayment of debts, which gives rise to a conflict of interest.

Overdue accounts receivable significantly increase the organization's costs, reduce actual revenue, profitability and liquidity of working capital, negatively affect financial stability, and increase the risk of financial losses of the company.

Accounts receivable management is part of the company's policy in the field of working capital management, and it consists of optimizing the overall size of this type of debt and ensuring its timely collection. Therefore, accounts receivable management must be carried out at all stages of interaction with counterparties, both at the stage of pre-contractual procedures and before the actual fulfillment of the obligations specified in the contract.

Most companies experiencing financial difficulties associated with non-payment of debts are afraid to implement an accounts receivable management system at their enterprise due to insufficient funds, labor reserves, and other factors.

Accounts receivable management can be divided into a number of areas:

§ the beginning of work with debtors from the moment of concluding an agreement on deferred payment. At this stage, it is necessary to have information regarding the size of the debt, the name of the counterparty, the obligation from which the debt arose, the subject of the agreement, and the deadline for its execution.

§ the beginning of work on preparing negotiations with the debtor. At this stage, in case of non-payment of the debt within the terms stipulated by the agreement, the next day after the payment is due, it is necessary to inform the debtor about the need to pay the debt, indicate the expiration of the payment deadline, the amount of the debt, and the consequences that may arise for him in case of late payment in accordance with the concluded agreement. When conducting negotiations, special attention is paid to the psychological aspect.

§ the beginning of work on preparing and submitting a claim. At this stage, the creditor prepares a written appeal to the debtor with a demand for payment of debt under a monetary obligation, compensation for losses, payment of a fine, elimination of deficiencies in the products supplied, the item sold, the work performed within the period specified in the claim.

§ the beginning of work on preparing and sending a statement of claim to the court. At this stage, the creditor, realizing that the debt will not be repaid voluntarily by the debtor, proceeds to collect the debt through the courts. A claim is a procedural means of protecting a violated or challenged right, inherent in the claim form of legal proceedings.

§ the beginning of work on debt collection in court. At this stage, the creditor takes measures to collect the debt from the debtor in court, that is, this stage begins from the moment the case is considered in court and ends with the collection of debt in court.

1.3. Accounts receivable management methods

An important component of a company's accounts receivable management system are methods. Purely financial methods include: E. Altman’s method, ranking receivables by age, compiling a register of “aging” accounts receivable, forecasting the probable amount of bad accounts receivable, determining the weighted “aging” of accounts receivable, calculating and evaluating financial ratios. Management methods include: “decision tree”, the “3 C” method of creditworthiness analysis, the matrix of the company’s credit policy strategy, the formation of an information base, the use of a remuneration system, “stretching” the payment period for accounts payable.

In relation to Russian conditions, leading experts in the field of financial management propose the following measures to improve the accounts receivable management system:

Exclusion of high-risk enterprises from the list of partners;

Periodic review of the loan limit;

Using the possibility of paying receivables with bills of exchange and securities;

Formation of the principles of settlements of the enterprise with counterparties for the coming period;

Identification of financial opportunities for the enterprise to provide a commodity (commercial loan);

Determining the possible amount of current assets diverted into accounts receivable for trade credit, as well as for advances issued;

Formation of conditions for ensuring debt collection;

Formation of a system of penalties for late fulfillment of obligations by counterparties;

Using modern forms of debt refinancing;

Diversification of clients in order to reduce the risk of non-payment by a monopoly customer.

Determining the possible amount of financial resources invested in accounts receivable is carried out using the following formula:

IDZ = ORK * KSC * (PPK + PR) 360

where IDZ is the required amount of financial resources invested in accounts receivable;

ORK - planned volume of product sales on credit;

KSC - coefficient of the ratio of cost and product price, expressed as a decimal fraction;

PPK - the average period for providing credit to buyers, in days;

PR - the average period of late payments on the loan provided, in days.

Accounts receivable management directly affects the profitability of the company and determines discount and credit policies for low-performing buyers, ways to accelerate the collection of debts and reduce bad debts, as well as the choice of sales terms that ensure a guaranteed flow of cash.

Accounts receivable management techniques include: recording orders, issuing invoices and establishing the nature of receivables. Among the points to be considered, there are some that require special attention, such as the need to find ways to reduce the average period of time between the completion of a sale of goods and the issuance of an invoice to the buyer. You should also evaluate the potential costs associated with accounts receivable, i.e., the lost profits from not using funds instead of investing them.

Accounts receivable management is associated with two types of time reserves - for issuing an invoice and sending by mail. The time for issuing an invoice is the number of days from sending the goods to the buyer until the invoice is sent. Obviously, the company should send invoices at the same time as the goods. Postal delivery time is between the preparation of the invoice and its receipt by the buyer. Postal transit times can be reduced by decentralizing invoicing and mailing (using a rush mail service for large invoices and delivering within the stipulated time frame, or offering discounts for advance payments).

Credit terms. A key point in accounts receivable management is determining the timing of credit (provided to customers) which affects sales volumes and cash collection. For example, providing longer credit terms is likely to increase sales. Credit terms have a direct bearing on the costs and income associated with accounts receivable. If credit terms are tight, the company will have less cash invested in accounts receivable and losses from bad debts, but this may result in lower sales, lower profits and negative customer reactions. On the other hand, if the terms of the loan are vague, the company may achieve higher sales volumes and more revenue, but also risks higher bad debts and greater costs associated with ineffective customers delaying payment. Accounts receivable terms should be liberalized when you want to get rid of excess inventory or obsolete products, or if you are in an industry where products are sold seasonally (for example, swimwear). If your product is perishable, you should use short-term accounts receivable and practice payment on delivery whenever possible.

When assessing the solvency of a potential buyer, the buyer's integrity, financial stability and property security should be taken into account. The buyer's credit reliability can be assessed by quantitative methods - regression analysis, which considers the change in the dependent variable that occurs when the independent (informative) variable changes. This method is especially useful when you need to evaluate a large number of small buyers. You should carefully evaluate potential bad debt losses if your company sells products to many customers and has not changed its credit policy for a long time.

Extending a loan entails additional costs: administrative costs of the credit department, computer service, as well as commissions paid to special agencies that determine the creditworthiness of borrowers or the quality of securities.

Information obtained from retail credit bureaus and professional credit reference services is quite useful. The reports of Dun & Bradstreet (USA) contain information on the nature of the company's business, production lines, management, financial position, number of employees, previous payments as reported by suppliers, current debt obligations (including any overdue), terms of sales, auditor's report , lawsuits, insurance coverage, leases, criminal prosecution, relationships with banks accounting information (for example, current bank loans).

Accounts receivable control. There are many ways to maximize accounts receivable returns and minimize potential losses: billing, reselling debt collection rights, and assessing the financial situation of customers.

Invoicing. In cyclical billing, customers are billed at different periods of time. Under this system, customers with last names starting with "A" might be the first to be billed on the first day of the month, those with last names starting with "B" would be billed on the second day, and so on. Invoices must be sent to customers within twenty-four hours from the time they are issued.

To speed up collection of payments, you can send invoices to customers while their order is still being processed at the warehouse. You can also bill for services at intervals if the work is completed over a specific period, or charge fees up front, which is preferable to making payments upon completion of the job. In any case, you should prepare invoices for large amounts immediately.

When a business is growing passively, seasonal billing dating may be used: you offer payment extensions to stimulate demand among customers unable to make payments before the end of the zone.

Buyer evaluation process. Before extending credit, you should carefully review the buyer's financial statements and obtain rating information from financial advisory firms. Highly risky receivables, such as those from customers operating in a financially fragile industry or region, should be avoided. Businesses also need to be careful with clients who have been in business for less than one year (about 50 percent of businesses fail within the first two years). Typically, consumer receivables carry a greater risk of default than corporate receivables. Credit limits should be modified and payment collections expedited based on changes in the buyer's financial situation. This can be accomplished by withholding products or withholding services until payments are made and requiring a collateral to support the doubtful accounts (the value of the collateral must be equal to or greater than the account balance). If necessary, you should use a collection agency to recover funds from recalcitrant buyers.

It is necessary to classify accounts receivable by due date (arrange them according to the time elapsed from the date of invoice) to identify customers who violate payment deadlines, and charge interest to late payments. Once current aging accounts receivables have been compared with historical accounts receivables, industry standards, and competitors, a bad debt loss report can be prepared showing accumulated losses by customer, terms of sale, and amount, organized by business unit. , product line and type of buyer (eg industry). Bad debt losses tend to be higher for smaller companies.

Protection by insurance. You can resort to credit insurance, this measure against unexpected losses of bad debt. When deciding whether to purchase such protection, it is necessary to evaluate the expected average bad debt losses, the company's financial ability to withstand those losses, and the cost of insurance.

Factoring. It is possible to resell the rights to collect receivables if doing so results in net savings. However, in a factoring transaction, confidential information may be disclosed.

Credit policy. When providing a commercial loan, you should evaluate the competitiveness of the enterprise and current economic conditions. During a recession, credit policy should be loosened to stimulate business. For example, a company may not rebill customers who receive a cash discount even after the discount has expired. But it is possible to tighten the credit policy in conditions of shortage of goods, since during such periods the company, as a seller, has the opportunity to dictate terms.

In general, accounts receivable management includes:

1) analysis of debtors;

2) analysis of the real value of existing receivables;

3) control over the ratio of receivables and payables;

4) development of a policy for advance payments and provision of commercial loans;

5) assessment and implementation of factoring.

Analysis of debtors involves, first of all, an analysis of their solvency in order to develop individual conditions for the provision of commercial loans and the terms of factoring agreements. The level and dynamics of liquidity ratios can lead a manager to the conclusion that it is advisable to sell products only with prepayment, or vice versa - about the possibility of reducing interest on commercial loans, etc.

Analysis of accounts receivable and assessment of its real value consists of analyzing the debt according to the timing of its occurrence, identifying bad debts and forming a reserve for doubtful debts for this amount.

Of particular interest is the analysis of the dynamics of accounts receivable by the timing of its occurrence and/or by turnover period. A detailed analysis allows you to make a forecast of funds received, identify debtors for whom additional efforts are needed to recover debts, and evaluate the effectiveness of accounts receivable management.

The ratio of accounts receivable and accounts payable is a characteristic of the financial stability of the company and the effectiveness of financial management. In the practice of financial activities of Russian companies, a situation often arises that makes it unprofitable to reduce accounts receivable without changing accounts payable (liabilities). A decrease in accounts receivable reduces the coverage ratio (liquidity), the company acquires signs of insolvency and becomes vulnerable to government agencies and creditors. Recall that the balance sheet of an enterprise is considered insolvent if:

volume of working capital at the end of the period / short-term debt at the end of period 2

volume of sources volume of non-current own income - assets at the end of the period / volume of working capital at the end of the period 0.1

Accounts receivable are an element of working capital; reducing them reduces the coverage ratio. Therefore, financial managers solve not only the problem of reducing accounts receivable, but also balancing it with accounts payable.

When analyzing the relationship between accounts receivable and accounts payable, it is necessary to analyze the terms of the commercial loan provided to the company by suppliers of raw materials.

4. Payment terms for shipped products are one of the factors affecting sales volume. Payment terms mean:

a) providing individual buyers with a commercial loan (deferred payment);

b) loan term;

c) discount for timely payment. The listed three conditions can be expressed by a common scheme: For example, “3/10 net 30” the company presents a 3 percent discount if the bill is paid within 10 days, the maximum period (without discount)

30 days. Deadline - the term of the commercial loan; further - penalties for late payment. Discounts are more preferable than surcharges, since discounts reduce the tax base, and surcharges increase it. Reward always works better than punishment.

The following main factors influence the level of accounts receivable:

Assessment and classification of customers depending on the type of product, volume of purchases, solvency of customers, history of credit relations and expected payment terms;

Control of settlements with debtors, assessment of the real state of receivables;

Analysis and planning of cash flows taking into account collection ratios.

To determine the investment in accounts receivable, a calculation is used that takes into account annual credit sales and the period of nonpayment of accounts receivable.

Making a generalization, we can conclude that accounts receivable management is based on two approaches:

1) comparison of the additional profit associated with a particular spontaneous financing scheme with the costs and losses that arise when changing the product sales policy;

2) comparison and optimization of the amount and timing of receivables and payables. These comparisons are made based on the level of creditworthiness, payment deferment time, discount strategy, income and collection costs.

Assessing the real state of accounts receivable, i.e. assessing the probability of bad debts, is one of the most important issues in working capital management. This assessment is carried out separately for groups of receivables with different maturities. The financial manager can use the statistics accumulated at the enterprise, as well as resort to the services of expert consultants.

Selective and continuous methods for analyzing settlements with debtors and creditors. Depending on the size of accounts receivable, the number of settlement documents and debtors, the analysis of its level can be carried out using both a continuous and selective method. The general scheme of control and analysis, as a rule, includes several stages.

Stage 1. The critical level of accounts receivable is set; all settlement documents related to debt exceeding a critical level are subject to mandatory verification.

Stage 2. A control sample is made from the remaining settlement documents. Various methods are used for this. One of the simplest is the n-percentage test (for example, with n = 10%, every tenth document selected by some criterion, for example, by the time the obligation arose, is checked).

There are also more complex statistical selection methods based on setting critical values for the level of significance, sampling error, permissible deviation between the amount of receivables reflected in the reporting and the amount of receivables calculated from sample data, etc. In this case, the sampling interval is determined by the monetary meter, and each settlement document on which the boundary of the next interval falls is selected for control and analysis.

Stage 3. The reality of the amounts of receivables in the selected settlement documents is checked. In particular, letters may be sent to counterparties with a request to confirm the reality of the information entered in the document or registered

Stage 4. The significance of the identified errors is assessed. In this case, various criteria can be used. Thus, according to the national accounting standards of Australia, a deviation between the accounting and the amounts confirmed as a result of a control check in an amount exceeding 10% is recognized as significant (material). If the deviation varies from 5 to 10%, the decision on its significance is made by the analyst (manager, accountant, auditor) at his own discretion. A deviation not exceeding 5% is considered insignificant.

CHAPTER 2. ANALYSIS OF ACCOUNTS RECEIVABLES OF JSC "CMD"

2.1 Brief characteristics of OJSC "CMD"

Open Joint Stock Company "Central Moscow Depository" (CMD) is the largest Russian registrar, operating on the domestic stock market for more than 15 years.

Having concluded its first agreement to maintain the register in 1994, today TsMD is an authorized company-registrar of state blocks of shares of privatized enterprises of the Russian Ministry of Property, servicing more than 6.2 million personal accounts of shareholders. The clients of OJSC "CMD" are the largest enterprises of Russian industry, such as OJSC "Federal Grid Company of the Unified Energy System", OJSC "RusHydro", OJSC "KAMAZ", OJSC "Tupolev", OJSC "Sukhoi Design Bureau", OJSC "Motovilikha Plants", OJSC VSMPO-AVISMA Corporation, OJSC Moscow Crystal Plant, OJSC Wimm-Bill-Dann, OJSC Seventh Continent, OJSC MDM Bank, subsidiaries and affiliates of OJSC Russian Railways, etc. .

OJSC "CMD" maintains registers of owners of corporate bonds, as well as bonds of constituent entities of the Russian Federation, such as the Administration of the Kursk Region, the Administration of the city of Syktyvkar, etc., maintains and stores registers of owners of investment shares of mutual investment funds managed by CJSC "Management Company "Troika" Dialogue".

The branch and transfer agent network of TsMD currently covers 69 regions of Russia.

Throughout the entire period of its activity, CMD has consistently occupied a leading position among professional companies in the securities market engaged in registrar activities, which is regularly reflected in the results of ratings conducted by professional rating agencies and the Professional Association of Registrars, Transfer Agents and Depositories (PARTAD).

Leading positions are a natural result for a company that employs highly professional employees, 180 of whom have qualification certificates from the Federal Financial Markets Service of Russia; for a company headed by a manager who has been included in the 1000 most professional managers in Russia over the past years.

The strategic goals of CMD today are complete information openness, the highest possible quality of services provided, a stable and effective regional network.

On the way to achieving these goals, CMD is guided by the main principle of its professional activities: strictly following the norms and requirements of Russian legislation, relying on all its many years of experience and highly qualified personnel, highly focused on the interests of its shareholders, improving the technologies used and reducing the cost of services provided - to be a guarantor of reliability for our clients.

The CMD Group is a reliable accounting infrastructure institution for the securities market, providing its clients with an effective mechanism for interaction with a wide range of shareholders and investors, based on innovative software and hardware solutions, promoting the dissemination of best corporate governance practices and attracting additional investments in the real sector of the economy by providing solutions exceeding customer expectations.

The group includes the following professional securities market participants: OJSC "Central Moscow Depository" - registrar; LLC "Central Moscow Depository" - depository, specialized depository of investment funds, mutual funds and non-state pension funds; CJSC Accounting System" - registrar; LLC "Energy Trust Company"; ENERGOTRASTKOM - trust management services. In addition to professional participants in the securities market, the group of companies "Central Moscow Depository" includes:
OJSC "TsMD-soft" - IT consulting on automation and optimization of business processes based on ERP and CRM systems, as well as the supply and implementation of our own developments.

2.2 Analysis of receivables of OJSC "CMD"

A preliminary assessment of the financial condition of TsMD OJSC is the first step in the analysis of receivables. Let's analyze the liquidity of the balance sheet and calculate the following ratios:

1) liquidity ratio is 2.13 (418,162 / 196,340).

According to international practice, the liquidity ratio values should be between one and two. In this case, the liquidity ratio is greater than two. But exceeding the total liquidity ratio is not a positive thing; it may indicate an irrational capital structure.

2) quick liquidity ratio = 1.85 ((175,711+186761)/196,340)

3) absolute liquidity ratio = 0.89 (175,711 / 196,340). This ratio shows what part of the short-term debt the company can repay in the near future. In our case, the value of the coefficient exceeds the statistical average, which indicates the high solvency of the enterprise as of the balance sheet date.

Summing up the brief results of the analysis of the preliminary assessment of the financial position of TsMD OJSC, we can conclude that this company is in a stable financial condition, has high liquidity and solvency.

Having found out the picture of the financial condition of the company in question, we will determine how effectively the management of accounts receivable is structured in the organization.

In the first phase of the analysis, the volume of receivables of the organization in question, receivables in relation to working capital are assessed (Table 1).

Table 1 Coefficient of diversion of current assets into accounts receivable

The diagram presented in Figure 1 clearly demonstrates the volume (level) of receivables of TsMD OJSC and its dynamics.

Rice. 1. Volume (level) of receivables of OJSC "CMD"

In the second phase of the analysis, the turnover and quality of receivables is assessed using the following set of parameters:

1. turnover of accounts receivable and the average payment period for accounts receivable (average collection period);

2. weighted “aging” of accounts receivable;

3. register of “aging” accounts receivable;

4. ratio of overdue accounts receivable;

5. forecasting bad accounts receivable.

1) The most important element of the analysis of accounts receivable is the assessment of its turnover. The trend in this indicator is often used to determine the validity of a discount for early payments. The higher the turnover rate, the less money is invested in accounts receivable. The number of receivables turnover is calculated using the formula:

What is important to know for effective management of enterprise accounts receivable

Accounts receivable are a consequence of the gap between the purchase and sale transaction of goods and payment (hereinafter, goods mean both the goods themselves and works and services). And although in all cases funds are transferred on the terms of payment and repayment, receivables have specifics:

funds can be returned in goods (“closing” advances);
accounts receivable management contributes to sales growth;
receivables can generate additional discount income and increase procurement efficiency;
Like all loans, receivables are subject to the risks of non-repayment, as well as inflation and other losses.

Download useful documents:

Types of receivables

Before we talk about how to improve the efficiency of managing an organization’s receivables, let’s understand what it is like. Receivables are divided by counterparties–buyers and customers, suppliers, budget (see Fig. 1).

Picture 1

Commercial is considered to be a receivable related to the main activities of the enterprise. This type of receivable consists of the main elements:

prepayments and advances to suppliers (credit for purchases of raw materials, materials, components, etc.);
deferred payment (commodity credits) to customers for shipped products;
overpayments for commercial purchases (amounts of funds transferred in excess).

Non-profit(administrative and economic) is associated with the costs of ensuring the operation of the company.

In both cases, depending on the reason for the occurrence, the receivable can be of two types:

documentary – when expenses are not covered by primary documents. This significantly distorts reporting and forces the company to overpay taxes, and in some cases hide fraud and theft;
monetary - arises as a result of non-receipt of money or goods advanced by them and is a form of temporary diversion of working capital, the most unpleasant consequences lie in the payment of money, lost profits and the property of such an asset not always being converted in a timely manner and in full into amounts on accounts or into material assets on the warehouses

There is also an intermediate type of receivables - this is a “disputed” receivable(usually as part of non-commercial expenses), which over time should be assigned to one of the main categories (see Diagram 2).

Figure 2

Stages of a debtor's life

To manage an organization's receivables, it is important to understand the evolution cycles of receivables; they are illustrated in Figure 3 and are associated with the following key events:

point A – date of actual transfer of values to the counterparty;
point B – date of entry onto the balance sheet;
point C – the repayment date specified in the agreement;
point D – date of transfer to the “overdue” category;
point E – date of transfer to the “hopeless” category;
point F – the moment of debiting from the balance sheet.

Figure 3. Cycle of life

Let's take a closer look at them.

Stage 1. Virtual

Period from B to C. At this stage, it is assumed that primary documents will be correctly generated and entered into the counterparties’ accounting systems to avoid unnecessary delays in formalizing the transaction and its parameters.

Example

In my practice, a group of companies took advantage of the fact that in contracts the deferment was calculated from the moment the primary documents were drawn up. By deliberately delaying the process, repeatedly forcing documents to be redone and sent, the company actually received an additional delay, in some cases exceeding that specified in the contracts. Sometimes this approach added 90, 120, or more days to the official deadlines.

The lack of properly completed primary documentation makes it difficult to resolve problems with shortages and surpluses in a timely manner, and if the problem is delayed too long, it casts doubt on the very fact of the transfer of values (especially with rapid rotation of personnel, excessive meticulousness of lawyers and the presence of malicious intent on one of the parties). In some cases, such errors, inaccuracies or unauthorized signatures may lead to the recognition of the transaction as invalid. That is why, at this stage, attention should be paid to finding ways to reduce the average period of time between the actual transfer of inventory and the issuance of an invoice to the buyer. In the case of a cash advance, this period is determined by the timing of the crediting of funds to the recipient. In other words, it is necessary to avoid discrepancies in determining the terms if debiting from the buyer’s account and crediting to the supplier’s account does not occur on the same day.

Stage 2. Current

The period from point C to point D. Receivables at this stage:

in terms of volume, it is formed by the primary documents recorded in the system;
in terms of terms, it remains until the repayment date (repayment means both the receipt of funds for the deferments granted, and the receipt of goods on account of the advance made. - Author's note);
in terms of quality it is considered normal (working) and can be most effectively refinanced through assignment.

It should be noted that even for current debt, the probability of timely repayment is inversely proportional to the length of the period for which it is provided. The reason is simple: by agreeing to a deferred payment or advance delivery for a month or less, you can predict the partner’s position more accurately than when it comes to a period of six months or more. As the period increases, previously unknown factors (in particular, external economic conditions) may emerge that could lead to partial or complete non-payment.

Stage 3. Problematic

Period from point D to point E. Debt at this stage:

in terms of volume, it is formed from debts that have missed the repayment date (this also includes restructured debt until its full repayment, and in the event of the first violation of the new schedule, it goes into the category of overdue receivables);
in terms of time, it remains until it is recognized as overdue (each new day geometrically reduces the chances of collecting a problematic debt, that is, it quickly “grows old”);
the volume increases due to the imposition of penalties on the counterparty.

Part of such debt can be repaid quickly if it turns out to be problematic for two easily removable reasons:

human factor – inattention or lack of discipline of partner managers, loss of documents, lack of decision-making managers, etc.;
temporary technical problems with the counterparty - an emergency in the office, a delay in crediting funds by the bank, etc.

In practice, such situations are not uncommon when working with small enterprises with poorly developed business processes, when the problem can be resolved after one telephone reminder. Other reasons for non-payment complicate the prompt closure of the issue.

The length of the “problem” period depends on many factors, including the rigidity of the enterprise’s credit policy and business customs in the industry. But as a general rule, it cannot be less than the period for voluntary resolution of the problem (within a week) and should not exceed a quarter or, if the agreement involves regular payments, non-payment of the third amount as scheduled.

It is during the “problem” period that the financial director’s prompt intervention in the situation, all other things being equal, provides a greater chance of repaying the debt. Even if the debt is a consequence of objective reasons - a sudden deterioration in the financial situation of a partner or the presence of malicious intent (fraud), - the opportunity to “press” within reason and receive at least part of the payment remains if the initiative is not lost.

Stage 4. Overdue

The period from point E to point F. All receivables that have not been repaid or have not been restructured into problem status go to this stage. Lawyers and security services must be involved in the work.

Efficiency can be divided into four groups:

1 – indicators of volume, composition and structure;
2 – liquidity indicators;
3 – risk indicators;
4 – indicators of profitability (profitability).

To improve the efficiency of working capital management, all groups of indicators need to be normalized and compared with actual data, correlating with general and weighted average values. To strengthen control, such an assessment should be carried out for each counterparty and transaction. Individual planning is fixed in the terms of delivery, general planning - in the form of standards for the period. When working with indicators, it is necessary to take into account the specifics of the business. In particular, at least four significant factors cannot be ignored:

dynamics of company development;
actions of competitors;
seasonality (both in terms of sales and procurement);
the presence of large counterparties, the irregularity and significance of transactions with which can lead to the emergence of technical extremes, fraught with the emergence of misconceptions regarding the real financial position of the company.

Indicators for analysis and management of receivables

To properly manage accounts receivable, it is useful to compare your ratios with the best industry or regional benchmarks to reduce the influence of subjectivity. Let's consider each group of indicators in detail.

Group 1. Indicators of volume, composition and structure

The volume of enterprise debts in absolute and relative values reflects the actual use of working capital to finance partners in the form of trade loans and advances issued. Absolute and relative assessment of receivables by type of goods, purchases and administrative expenses is important for solving a number of problems.

1. By setting the maximum amount of debt in general and for one and (or) a group of counterparties, even in an unfavorable situation for partners, the enterprise will maintain solvency.

2. Having determined the size of receivables (problematic, , bad and written off) in absolute terms and shares in the average debt for the period, it is possible to assess the received and potential losses, as well as priorities for the work and motivation of personnel.

3. Having identified assortment positions and counterparties that are unprofitable from the point of view of diversion of working capital, it is possible to make appropriate changes to policy and production plans.

4. Having determined the sources of funding (through the ratio of receivables to creditors, as well as other liabilities), you can manage the “gaps” and the level of credit risk.

The growth of receivables in absolute terms and its share in current assets is assessed positively only if it is associated with an increase in sales while maintaining prudent credit policy and acceptable debt quality. A reduction in accounts receivable should not cause concern only if the repayment period has decreased without reducing the company's activity. Ideally, the volume of overdue and bad debts should be zero, with bad debts being rare, insignificant and repayable within a reasonable period of time.

It makes sense to put some of the debts into a separate category to analyze the volume and structure. This primarily applies to non-commercial debts: security deposits and advances, the absence of which will stop business processes or lead to a refusal to provide the company with significant services (for example, rent or communications).

With the dynamic development of the company, even the excess of the creditor over the rapidly growing receivables should not stop from analyzing the situation with debtors (see more details, how to control accounts payable ). If the amounts are equal, the risks for these assets and liabilities are diametrically opposed: the default of even part of the debtors does not relieve the company from obligations to creditors. The entire volume of assets must be under control, and not just the sum of their difference with liabilities or other derivatives.

Group 2. Liquidity indicators

Liquidity reflects the speed at which debts can be repaid without significant loss in value and affects the solvency and financial stability of the firm. Debt can be recognized as liquid:

short-term (with fast turnover);
repayable on time (on schedule or faster);
if necessary, capable of being refinanced (for example, with the help of factoring) without significant costs.

Assessing the terms of debt refinancing allows you to determine the speed and additional costs of repaying them using the following basic tools:

factoring and forfeiting (sales of debt to banks and specialized organizations), taking into account the fact that such assignment of debts additionally reduces the cost of administrative debt servicing due to the disposal of part of the functionality;
execution of a bill of exchange or other short-term securities with their subsequent release into secondary circulation, taking into account the fact that this simplifies the resale of debt, and the valorization of a bill of exchange by the general director is an additional motivator for the timely transfer of funds and a barrier to the partner’s managers issuing impossible obligations in advance;
offset of counter obligations (including multilateral);
barter (non-monetary form of repayment).

Let's look at the main indicators that can be used to assess liquidity.

1. Debt turnover characterizes the level of its natural repayment within the financial cycle. The indicator is determined by the formula

Turnover = (Average receivables in the period × Number of days in the period) : Revenue for the period

Collection period – the average number of days required for collection. The smaller it is, the higher the liquidity of working capital, the faster, other things being equal, the company’s other assets increase, the creditor is used more efficiently and the cost of goods decreases (with an increase in turnover, the share of fixed expenses attributable to the cost in a given period decreases). An increase in the indicator may indicate difficulties with debt collection, including due to deterioration in its quality, as well as an increase in the operating cycle and a decrease in the overall profitability of the company. It is advisable to correlate the dynamics of receivables turnover with the dynamics of turnover of liabilities funding it, as well as with budget standards.

The indicator of the share of their turnover period in the total duration of the operating and financial cycles can clearly compare the turnover of receivables and creditors (Fig. 4).

Figure 4

If the receivables turnover significantly exceeds the production cycle, then perhaps the company earns more from lending (deferments) than from production. When financial services are not a company's core competency, this situation raises questions.

2. Collection ratio especially useful for analyzing the phased repayment of debt (for example, if the agreement provides for a three-month installment plan according to the 50%/30%/20% scheme). The formula for calculating the indicator is as follows:

Collection ratio = (Receipt for repayment of receivables of the period × 100) : Sales volume during this period

The actual value of the coefficient must be compared with the planned value, and a separate analysis must be carried out for counterparties and transactions.

3. Risk indicators characterize the likelihood of potential loss of debt or part of it. There are four main risks:

Credit – associated with non-fulfillment or incomplete fulfillment of obligations by the counterparty.
Inflationary - arises due to the duration of the existence of debt on the balance sheet in the form of deferred payments.
Foreign exchange – in the case of foreign economic activity.
Legal – causes losses due to non-recognition of debt for formal reasons.

While deferments to buyers increase these risks, debt in the form of prepayments to suppliers, on the contrary, reduces them.

The specifics of the counterparty's industry or transaction may impose additional risks that can exceed the size of potential losses from the “standard” risks listed above.

All other things being equal, credit risk is the most important indicator to control. Its main threat stems from the fact that the counterparty is assessed on the basis of incomplete and not always reliable data (for example, on the basis of its own payment statistics, subjective impressions of managers, reputation in the market or, much less often, based on historical accounting reports). In addition to incompleteness (sometimes unreliability), the information provided may turn out to be outdated or irrelevant by the time of analysis. In addition, even large and financially stable companies often deliberately allow themselves significant delays with small counterparties, realizing that otherwise their supplier will face a severance of relations and the loss of even such unstable income. Partners of large retail chains, monopolists and, in some cases, government agencies are at risk. There is also a positive effect from “personal relationships”, which sometimes allows you to maintain confidence in payments even if competing companies have significant problems.

The optimal approach is an expert assessment of credit risk, taking into account internal statistics and adjustments based on the results of an analysis of available information.

Example

According to Table 1, it is clear that the two largest and most unreliable counterparties generate a third of sales and almost two-thirds of potential losses, and the company, in accordance with expert estimates, plans to receive less than 14 percent of sales, which is comparable to the revenue for the “New” and “New” partner groups. Foreign Economic Activity". These risks, expressed in loss forecasts, must be taken into account (compensated) in the pricing policy.

Table 1. Example of risk level analysis

Group (partner)	Debt, rub.	Forecast of losses, rub.	Repayment forecast, rub.
Group "Reliable"
Group "New"
VED Group
JSC "Rose"
Gvozdika LLC

Certain opportunities are provided by non-payment insurance, although the lack of widespread use of the instrument on the domestic market makes it quite expensive and not always effective, especially taking into account the need to comply with the requirements of insurance companies. However, effective insurance can significantly reduce the burden of managing overdue receivables and minimize potential losses, including the costs of unnecessary administration and unproductive collections.

4. Profitability indicators help assess the ability of debts to earn income in excess of their cost of funding. There is a cost to deferring buyers or making advances to suppliers. If a creditor provides resources for free, he receives less profit from their alternative placement and loses part of them due to inflation and non-free funding liabilities.

In practice, the value of liabilities can be determined based on the following indicators:

weighted average cost of capital (WACC);
actual cost of loans to replenish working capital;
actual cost of factoring (forfaiting) services;
the required rate for return of capital, etc.

The logic is simple: if the WACC is 18 percent per annum, then if payment is deferred for 30 days, compensation of at least 1.5 percent (18%: 365 days 30 days) of the shipping cost must be included in the price. It is necessary to take into account compensation for the risk of non-repayment and an increasing coefficient that motivates the counterparty to look for other forms of financing. This is how the effectiveness of the supplier's advance payment in exchange for a discount is assessed.

Example

The company took out a loan at a rate of 18 percent per annum. Its counterparty is ready to reduce the price by 15 percent in case of quarterly prepayment. Such a deal will be cost-effective, since the cost of funding is 3.3 times less than the additional benefit.

The final decision should be made after assessing the risks of non-delivery, subject to compliance with supplier limits.

Example

The duration of the production cycle is 14 days, the creditor's turnover is 10 days, the accounts receivable's turnover is 60 days, the markup on goods is 10 percent (for convenience, we do not include interest expenses in the cost price), WACC is 18 percent. The financial cycle lasts 64 days (60 + 14 – 10), and the real markup decreases by 3.2 percent (18%: 365 days 64 days) to 6.8 percent. If we calculate the real buyer lending rate taking into account risk premiums, the “production share” in the markup will be even smaller. With a loan cost of 30.4 percent per annum, the markup will be distributed equally: the company will earn 5 percent on the deferment, and the same amount will be its real marginal income.

At this stage, the financial service can participate in increasing the profitability of the business. For example, if you take into account the cost of factoring with additional profit, and then sell the debt to the factor without recourse, you can make money on it.

Example

The company raised financing from a factoring company for a period of 60 days at a rate of 30 percent per annum. And then she included in the buyer’s price an additional markup of 10 percent for a 60-day deferment and assigned the debt to the factor. As a result, the company earned half of the additional markup without increasing risk.

Such “techniques” are especially interesting for managers whose motivation is tied to EBITDA rather than net profit: even being equal, interest expense does not reduce the additional income included in the markup for deferred sales. But if the purchase is made in foreign currency and the sale is in rubles, the delay creates currency risks.

An effective analysis of the receivable's profitability should lead to the fact that the cost of funding and maintaining it with provisions for non-fulfillment of obligations and a risk premium should be calculated and presented to the commercial service for re-billing to buyers, taking into account potential problems associated with a decrease in the price competitiveness of transactions.

What to include in the receivables control regulations

What to include in the control regulations, see the video.

Commercial Receivables Management System

Commercial debt is associated with the provision of deferments to buyers and customers, as well as with advances to suppliers. In the face of fierce competition, sales only on the basis of 100% advance payment or unwillingness to make advance payments to the supplier of raw materials worsen the position of the enterprise. If the company can attract inexpensive financing, a reasonable policy of deferments and advances makes it possible to obtain a return from debt turnover that is commensurate with or even exceeds the direct markup. As part of managing commercial receivables, it is important to consider a set of measures that will allow you to effectively control its performance and avoid excessive costs for maintaining its turnover. The smaller the size, the greater the quantity and the worse the quality of the debtors, the more difficult and expensive it is to service the debt, other things being equal. The more reliable the barriers to the occurrence of fraudulent and pre-unfortunate debts are built, while simultaneously simplifying the conditions for working with high-quality, trusted partners, the cheaper and more effective the management is.

An effective accounts receivable management system is a system that solves the following problems:

formalize and update effective trade and procurement policies that allow increasing business profitability while maintaining acceptable risks;
maintain a balance between debt and the liabilities that fund it;
determine priorities in matters of volume and range of production;
generate and timely update cash flow forecasts;
reduce costs for purchasing and sales support.

The stages of solving these problems are shown in Figure 5. Next, we will consider each stage in detail.

Figure 5. Commercial Receivables Management Cycle

Stage 1. Defining the rules of the game

This stage includes several successive steps.

Step 1. Drawing up regulations. Regulations need to be formed regarding:

commercial sales lending (providing deferments to various groups of buyers by type of goods);
commercial advance of purchases (making advance payments to various groups of enterprise suppliers by type of purchase).

Early payment almost always implies a discount, so buyers are interested in buying in advance, and sellers are interested in shipping on credit. Even the incomparability of the cost of such financing of counterparties with the price of attracted loans is not a compelling argument: bank interest is not taken into account in EBITDA, and managers motivated by such an indicator will resist to the last.

Step 2. Personalization of responsibility for compliance with regulations. The purpose of this stage is to assign a specific manager to each counterparty, and a responsible representative of the department to each process. In this case, the manager is understood as the manager of the sales department or the purchasing department (OP/OP); the divisions are the financial department (FD), commercial department (CD), legal service (US) and security service (SB). Accounting is considered part of the FD.

In practice, there is such a distribution of responsibility when different departments that have conflicting goals are responsible for sales and debt collection.

Example

The sales manager is motivated to maximize sales, and the financial manager is motivated to minimize the level of debt, which contributes to justified dissatisfaction on the part of clients and a conflict between the commercial department and the financial department.

The distribution of responsibility for the implementation of individual procedures between departments must be determined in advance (an example is given in Table 2). The success of distribution can be assessed by two criteria:

absence of “blank spots” in the regulations (undescribed or not clearly defined processes);
avoiding conflicts of interest (regulation, execution and control must be separated).

Table 2. Distribution of responsibility for the implementation of receivables management regulations

Management stage	Action	Responsible
Preliminary	Collection and provision of information about the counterparty for analysis	OP Manager
	Analysis of the information provided, collection and analysis of additional data	Representatives of the YS, FD and SB
	Formation of working conditions with the counterparty	Working group CD, FD and SB
The emergence of virtual accounts receivable	Control of document flow and ensuring formalization of debt	OP Manager
Appearance of current receivables	Payment Reminder	OP Manager
Appearance of current receivables		FD representative
The emergence of problematic accounts receivable	Blocking payments (deliveries), informing stakeholders, finding solutions	OP Manager
	Sending claim letters	Representative of the US
	Search for refinancing opportunities	FD representative
The appearance of overdue receivables	Stopping payments (supplies), searching for solutions	OP (Op) Manager and Chief Design Officer
	Conducting reconciliations, calculating fines, exploring opportunities for debt sale	Representatives of FD and CD
	Pre-arbitration notice partner	Representative of the US
	Checking compliance with regulations by OP (Op) managers, searching for opportunities to speed up the process	Security Council representative
The appearance of uncollectible accounts receivable	Filing a claim in court	Representative of the US and Security Council
	Search for sales opportunities (debt write-off)	Representatives of the FD
	Correcting mistakes	Working group CD, FD, YUS and SB

Step 3. Determination of liability for violation of regulations. Here it is worth highlighting:

internal measures – responsibility of company employees for non-compliance with procedures;
external measures – penalties to counterparties for failure to fulfill the terms of contracts.

Step 4. Motivation to comply with regulations. As practice shows, the use of only penalties does not always lead to a reduction in overdue payments and can even demotivate employees and contractors. Therefore, along with measures of responsibility, it is important to think through methods of motivation. In practice, the following effective solutions are used:

part of employee remuneration depends on their success in dealing with debt;
counterparties understand in advance the prospects for improving their positions, subject to strict compliance with agreements.

Step 5. Propaganda and explanation of the “rules of the game”. To comply with regulations, employees and contractors must understand them in order to be active participants, and not formal executors working under the threat of sanctions or in anticipation of monetary benefits. The clearer and more transparent the system, the more willingly the managers themselves remind counterparties about debt closure and the more savvy they are in terms of registration and completion of primary documentation. In some cases, it is ideas “from below” (from employees) or “from the side” (from interested partners) that turn out to be the most effective tools for preventing problems or “expanding” complex debt.

Stage 2. Indicator planning

Work on regulations begins with planning.

Tactical planning – determination for a given period of general principles of working with products and contractors; tactical principles of debt formation should contribute to the achievement of direct (profit growth, turnover, market share, etc.) and indirect (political, image, etc.) goals of the enterprise for a specific period.

Operational planning – establishing limits (standards) and working conditions for specific partners and assortment positions; operational plans are the distribution of tactical plans according to the “map” of partners (partners must be distributed into segments with the definition of a matrix of working conditions for each of the segments).

The need to segment commercial partners is due to the fact that not all of them are equally economically interesting and significant for the company. To rank them effectively, it will be necessary to identify criteria that reflect the specifics of the business, as well as the inherent risks of it and its counterparties, taking into account the following several parameters:

economic – the solvency and discipline of the partner, his share in turnover and profit, financial terms of interaction, etc.;
marketing – the ability to test a new assortment, influence on brand recognition and attractiveness, etc.;
others who can effectively divide partners into groups with different principles of interaction - business size and geography of development, history of relationships, whether the counterparty belongs to certain industries or has specific risks, etc.

The level of detail should not significantly complicate or increase the cost of either initial planning or further support of work with contractors. In practice, three main techniques are most often used for these purposes:

ABC analysis to assess the prospects of customer and assortment policies;
XYZ analysis for classifying counterparties depending on the stability of turnover and the accuracy of forecasting their dynamics;
partner analysis for a comprehensive assessment of direct and indirect benefits.

Each segment should be assigned its own attractiveness rating and policies should be defined.

Example

Partners of the company with the lowest rating cannot receive deferred payments and prepayments. With an increase in rating, they have the opportunity to have short-term receivables up to a certain level (debt limit) with the condition of full repayment before the next transaction. The highest rating already means establishing a limit on current debt without restrictions on the number of transactions that form it.

The determination of the rating and its “evolution” should be a transparent process and applied equally to all counterparties, regardless of whether they have any preferences. This will enhance the credibility and practicality of the approach being taken.

In addition to maximizing profits and solving marketing problems, segmentation for planning purposes should contribute to the diversification of debtors in order to reduce financial risks due to non-payment by a monopoly customer or problems in a particular market sector. In practice, if an enterprise from time to time makes advances to too large counterparties, it is necessary to calculate the emerging risk and its possible consequences. In cases where the potential loss could lead to bankruptcy, the loan should be denied, even if the probability of default is relatively low. Ideally, to optimize profitability, liquidity, risk and target marketing indicators, the company should determine the maximum allowable amount of receivables both in general, and for individual counterparties and their segments, and for individual assortment and purchasing positions.

After forming the conditions and assessing the risks, it is necessary to plan (predict and thereby limit) the volumes of uncollected debt on time and the procedure for working with it, including its timely assessment, sale and write-off with the possibility of compensating for losses by including them in the price of goods sold on a deferred basis or in discount on valuables purchased on an advance payment basis.

Next, a system of penalties is formed, which, on the one hand, should not scare off disciplined partners with its harshness, on the other hand, should motivate them to fulfill obligations, and on the third, should compensate for potential financial losses and lost profits.

At the planning stage, more serious strategic decisions are also possible:

refusal to work with a certain segment or with specific counterparties;
additional development or contraction of business in certain markets;
adjustment of the production program in order to increase the output of products with higher quality receivables or similar changes in purchases.

Stage 3. Operational work

At this stage, the implementation of regulations and agreements is regularly monitored, key indicators are checked, and the impact of the current and projected amount of debt on the financial stability of the company is assessed. An example of such measures for operational debt management is given in Table 3. Based on the results obtained, measures are implemented to minimize deviations from plans.

Table 3.

* The working group on commercial receivables is formed from all responsible employees of the OP (OZ) and their head, as well as representatives of the FD, YS and SB. The task is to provide and analyze data that can influence the dynamics of indicators, identify unreasonable deviations and promptly respond.

In the process of operational work, four tasks must be solved in parallel.

Task 1. Preventing the unreasonable occurrence of bad debts. This task is key. To solve it, it is necessary to predict the status of debt by amounts and partners, create and update registers of actual debt, and also initiate the necessary actions:

stimulating timely payment (delivery) by a counterparty with a deteriorating rating by introducing additional incentives for it;
restructuring or prolongation of debt to partners for objective reasons;
blocking shipments (purchases);
reduction in line size or refusal to provide a deferment (advance);
demand for early repayment or return of the advance (if the agreement provides such an opportunity);
refinancing (factoring, barter, offset, drafting a bill, etc.).

Task 2. Preventing the aging of unpaid debts. In addition to the above actions, you can initiate the following:

application of penalties;
transfer of the case to judicial proceedings;
assignment of debt to specialized organizations.

Task 3. Monitoring the effectiveness of purchasing and sales policies, which involves comparing additional income from the availability of receivables with the cost of funding it, taking into account the risk premium.

Task 4. Liquidity management. If the situation with short-term liquidity worsens, you can establish special discounts for early payment or consider the possibility of refinancing current debts through factoring and other instruments. If unplanned excess resources appear, they can be used to advance purchases with the condition of an additional reduction in purchase prices or receiving other benefits for early payment.

The first two tasks are related to strict adherence to approved procedures and implementation of plans. The last two are with the participation of the commercial department together with the financial department in managing working capital.

Stage 4. Audit of the “rules of the game”

Current regulations require periodic updating and additions. The reasons for this may be different:

detection of errors (shortcomings) or “blind spots”;
changes in internal settings and conditions;
change in the external environment.

Practice shows that some problems and situations not initially described in the regulations can be formulated only after some time. Most often, initial regulations forget to mention three categories of problems:

random double payments;
technical overpayments (for example, due to refusal of part of the supply after making an advance);
too early transfers of funds at the request of a procurement manager “properly motivated” by the partner.

A situation may arise when the buyer complies with the delivery payment schedule, but is in no hurry to repay the debt, for example, for joint participation in a promotion, and such debt turns out to be “orphaned”. Each such case should be studied with subsequent changes to the regulations to prevent similar errors.

Specifics of managing non-commercial receivables

Unlike the commercial one, for which a limited number of managers are responsible, the administrative and economic (non-commercial) one can be generated by almost any employee of the company. For example, through receiving money on account or due to an unsubmitted business trip report. In addition, the number of non-commercial counterparties can be many times greater than the number of commercial ones, and therefore, while maintaining general approaches, the management of non-commercial receivables has a number of specific features.

First, the debt must be personified. Unlike commercial counterparties, several divisions can participate in administrative and business operations with the same partner.

Example

The secretariat orders tea and coffee from the same organization where the IT department orders cartridge refills, and the office manager orders office supplies.

It is important to correctly determine who is responsible for a specific amount. For example, if shipments and payments for different departments are carried out according to separate documents, it will become easier to keep total accounts receivable under control. Some problems arise in cases of rapid personnel rotation or redistribution of functionality between departments, when the new employee does not consider himself obligated to deal with the problems that arose before him. Such “pain points” should be given special attention, including in the process of planning changes in functionality.

Secondly, rationing by type of expense will be required. A significant part of non-commercial receivables lends itself well to rationing: security deposits, prepayment of rent, subscription to regular services, etc. The basis for the formation of standards and building a separate policy for managing specific debt can be a classifier of types of expenses, the content of which depends on the characteristics of a particular business, but in most cases it necessarily contains the following five:

landlords and utility providers (separately);
suppliers of other services and works (by type);
suppliers of goods for own consumption;
affiliated structures (separate owners and subsidiaries);
company personnel (by type of debt).

It is important to remember that classification is not an end in itself, but a tool for increasing the transparency and manageability of receivables. For example, in some cases, business features require dividing landlords into several groups and subgroups (for example, in retail chains), while in others they allow rental services to be combined into one group along with utilities and communications (in a single-office business). The principle of operation is simple: the more problems a particular debt has and the larger its size, the more attention should be paid to it and, accordingly, the more detailed the classification is needed.

Setting limits and rationing receivables by type can be based on statistics and simple logic, especially for expenses with predictable dynamics. But for one-time or non-recurring costs of a company, such control may not be applicable.

Example

The departure of all top managers for a conference in Europe will mean a one-time prepayment to the tour operator for an impressive amount, which, however, will not become a problem if it disappears from the balance sheet within a few business days after the group returns and a full set of primary documents is submitted to the accounting department.

In other cases, it makes sense to indicate specific standards for closing the relevant type of debt and strictly adhere to them. We are not talking about the average turnover of the debt pool, but about the limit for each specific expense. All amounts not closed on time need to be additionally monitored in order to prevent situations from arising when, in the presence of a good weighted average turnover, a number of advances hang around for years and in fact turn out to be payments to companies that have gone bankrupt or were initially dubious. Separate accounting will not give dishonest employees of the organization any head start, and will give managers who unintentionally contacted the “wrong” counterparties the opportunity to correct the mistake immediately “hot on their heels.”

Thirdly, the importance of communications cannot be underestimated. In non-profit accounts receivable, the documentary part is traditionally large, for which managers must provide papers to generate expenses. In practice, managers consider the problem closed immediately at the moment of transferring the required documents to the accounting department or receiving a payment order from the counterparty to repay the debt, which can introduce an obvious imbalance in the process of monitoring actually closed receivables, especially in the last days of the month. In some situations, it can even reach the point of absurdity when the manager considers the issue resolved, and the accounting department does not close the accounts receivable due to errors or incomplete documents, but does not notify the manager about the presence of problems. If you spend some effort on solving communication problems and breaking down the “glass walls”, the positive effect will not be long in coming.

Assessing the effectiveness of accounts receivable management

To make sure that the company’s accounts receivable management policy is effective and approved regulations are followed, it is necessary:

calculate the main indicators for assessing the quality of management and compare with the planned ones;
check the quality of control procedures.

To make sure that accounts receivable cover current obligations to creditors and the amount of overdue debt is within normal limits, you need to:

Compare the turnover of accounts receivable and accounts payable.
Determine the share of overdue debt in the total volume of receivables.
Compare the growth rate of revenue and receivables.

Lecture 4. Accounts receivable management

Accounts receivable is the most dynamic component of an enterprise’s current assets, the scale and dynamics of which can be influenced by a financial manager. The share of current assets advanced into this asset in 2008, according to the Federal State Statistics Service, ranges from 32 to 63%, depending on the sector of the economy. This is due to the need to compete in product markets. By providing customers with favorable conditions for the purchase of manufactured goods and services, the enterprise creates receivables. The use of modern mechanisms and methods for managing accounts receivable can significantly reduce the inefficiency for an enterprise in its formation and maintenance.

Under accounts receivable management is understood as a system for making and implementing decisions regarding the amount of receivables, leading to optimization of the enterprise’s cash flows while minimizing the total costs of managing receivables for a certain period. The elements of this system are the factors that determine the amount of receivables, goals, objectives, principles, algorithm, methods and tools for managing receivables.

Accounts receivable management at many Russian enterprises turns out to be ineffective, that is, situations often arise when an enterprise, having high profits, does not have cash. Since most enterprises operate on an accrual basis, when goods are shipped, profit is only generated and reflected in the financial statements, but does not exist in real terms until the corresponding amount of money is received in the bank account.

Mechanism for the formation of accounts receivable. Let us assume that an enterprise that has recently started its activities has agreed with its customers to sell goods every day in the amount of M with the condition of payment through t days. Through t days the level of accounts receivable will be S, equal to the product M on t. On the (t+ 1)th day, and on each subsequent day, the company sells more goods in the amount of M on terms of payment through t days. But accounts receivable do not go beyond the S level, since customers who made purchases in the early days pay the amounts M that they owed. As a result, new sales on deferred payment terms are exactly covered by payments on debtors' accounts, and the level of receivables equal to S, while the amount of sales on deferred payment terms remains unchanged, remains stable.

For clarity, we will graphically depict the mechanism for the formation of receivables, using data from the company Agapov and Partners. This company, which produces car alarm devices, has decided, from February 1, to provide its customers with a deferred payment period of five days (t) from the date of shipment of the goods; the sales volume under these payment terms will be 10,000 thousand rubles. per day (M). Using this data, we will draw up a plan for the shipment of goods on deferred payment terms and the receipt of funds for them for the period from February 1 to February 10. This plan is presented in table. 4.1.

Table 4.1 – Scheduled shipment of goods on deferred payment terms and receipt of funds for them

date	Amount of sales per day on deferred payment terms, thousand rubles.	Receipt of funds to repay debt, thousand rubles.	Level of accounts receivable, thousand rubles.
01.02	10000,00		10000.00
02.02	10000,00		20000,00
03.02	10000,00	-	30000.00
04.02	10000,00		40000.00
05.02	10000,00		50000.00
06.02	10000.00	10000,00	50000.00
07.02	10000,00	10000,00	50000.00
08.02	10000,00	10000,00"	50000.00
09.02	10000,00	10000.00	50000.00

As can be seen from table. 4.1, from 01.02 to 05.02 the company plans to ship goods on credit, the value of which as of 05.02 will be 50,000 thousand rubles. (S), 06.02 the company, as usual, will ship goods worth 10,000 thousand rubles. and will receive funds as payment for a batch of products shipped on 01.02, i.e. five days ago. The amount of tribute paid by buyers to the company will remain at the level of 50,000 thousand rubles. until the conditions for conducting its business activities change. In Fig. 4.1 ace the above is presented in the form of a graph.

Figure 4.1 – Mechanism for the formation of receivables of an enterprise

Thus ,accounts receivable- This is the amount of debts to the enterprise for the goods, works, and services it sold. However, from a financial management perspective accounts receivable should be defined as a potentially positive cash flow deferred in time (i.e., currently it is a certain supply of money, part of which, under conditions determined by business entities, will be involved in real turnover in the future); In addition, the emergence of receivables is impossible without investing capital; therefore, it is necessary to form and use for these purposes a certain conditional fund on the principles of repayment, urgency and payment.

All approaches to determining accounts receivable are presented in table 4.2.

Table 4.2 – Definitions of accounts receivable

Many approaches to determining accounts receivable are associated with the variety of its types, therefore, accounts receivable can and should be classified. The main criterion is the “cause of occurrence” criterion; It is this criterion that is laid down in the legal acts of the Russian Federation governing the procedure for maintaining records and preparing financial statements. The classification of receivables according to this criterion is presented in table. 4.3.

Please note that the considered mechanism for the formation of receivables applies only to receivables from buyers and customers. The mechanism for the formation of other receivables is different, since its occurrence is associated with other reasons, other social and economic relations.

Table 4.3 - Classification of receivables according to the “cause of origin” criterion

Type of accounts receivable	Reason for accounts receivable
1. Debt of buyers “customers”	Providing buyers (customers) with a deferred payment for goods, work, services (commercial loan)
2. Other receivables, including
Bills receivable	Obtaining collateral for a commercial loan
Debt of subsidiaries and dependent companies	Conducting business transactions with affiliates
Debt of participants (founders) on contributions to the management company	Formation of the company’s own (authorized) capital
Advances issued	Advance payment for goods, works, services supplied by suppliers
Other debtors	1. Conducting business transactions with individuals 2. Overpayment (amounts to be reimbursed) for taxes and fees 3. Other settlements with legal entities

The next frequently used criterion is “ debt period" According to it, accounts receivable are divided into:

short-term accounts receivable, i.e. debt subject to repayment V within one year;

long-term accounts receivable, i.e. debt due in a year or more.

Recently, in financial practice such a concept as “ receivables quality" As a rule, it is understood as the relationship between two parameters, namely the financial condition of the debtor (a legal entity or individual who has a debt to the supplier for goods, works, services supplied) and the completeness and correctness of the package of documents confirming the fact of the formation and non-payment of the debt of this debtor for a specific If the debtor cannot repay the debt or the company does not have documents confirming the existence of receivables, then it is impossible to talk about the presence of a reserve of potentially positive cash flow - there is none. Therefore, the most important from the point of view of financial management is the classification of receivables according to the “debt quality” criterion. In this case, it is divided into:

current accounts receivable, etc. the repayment dates for such debt in accordance with the terms of the agreement have not yet arrived;

overdue receivables, i.e. the debtor's debt remains unpaid after the due date established by the contract.

In turn, overdue receivables are divided into dubious(i.e. not secured by collateral, surety, bank guarantee) and hopeless debt (i.e. debt that is unrealistic to collect due to the expiration of the statute of limitations (three years) or the occurrence of any other event established by the civil legislation of the Russian Federation).

Please note that the distribution of receivables according to the criteria of “debt period” and “quality” is carried out within the framework of current financial activities, i.e., almost daily, and is one of the most important stages of the algorithm for creating a system for effective management of receivables. Figure 4.2 shows the general algorithm for managing receivables.

To successfully implement this algorithm, it is necessary to rely on a number of principles:

1. The principle of unity and interaction, the tools for managing receivables must comply with the marketing and financial policies of the enterprise, and the decisions made regarding the management of receivables must eliminate the emergence of contradictions in the management of the enterprise as a whole and ensure its most efficient functioning.

2The principle of continuity and consistency: Accounts receivable management must be carried out on a regular basis, and its stages must be in a logically linked sequence.

3. The principle of flexibility: when managing accounts receivable, it is necessary to use only those methods and tools that are more consistent with the goals and objectives set for the enterprise in a specific period.

4. The principle of information accessibility: accounts receivable accounting should be organized in such a way that it is easy to obtain information about each counterparty and each agreement as of any date.

Figure - 4.2. Algorithm for effective management of receivables

Let's take a closer look at the receivables management algorithm and its individual stages. Initially, the management of the enterprise needs to decide on the goals and objectives of accounts receivable management.

In the long run target accounts receivable management comes down to maximizing total cash flow while minimizing the costs associated with the formation of accounts receivable. These costs include: the cost of capital from which the receivables are financed; expenses for maintaining personnel involved in accounts receivable management; expenses for collecting information about potential debtors; losses associated with the appearance of overdue debt, etc.

In the short term, the goals and objectives of managing accounts receivable are determined by the enterprise independently, based on the stage of its development, position in the market for goods, works, services, tactics of conducting economic activities, relationships with government authorities, financial capabilities, etc. The goal can be: an increase in cash flow, as well as its decrease, stabilization, maintenance of trends or the level of previous years, etc. d. For example, JSC North-West Telecom for 2012 formulated the goal of managing receivables as follows: to achieve systematic collection of current debt, reduce (liquidate) overdue debt of previous years, increase the collection rate of income from the provision of communication services, and also collect overdue receivables from budgets of various levels for the preferential category of citizens: at the same time, it was planned to solve the tasks of timely notification of subscribers about the occurrence of debt and its prompt repayment, transfer of subscribers (primarily legal entities) to an advance payment system for communication services.

At the next stage, it is necessary to analyze the quality of accounts receivable and evaluate its impact on the company’s financial performance. This allows you to determine the degree of compliance of the actual system of settlements with debtors with the set goals and objectives, identify debtors requiring special attention, and make a forecast of cash receipts.

Let's consider the main indicators used in this case, their purpose and methods for calculating them.

The first indicator working capital share, advanced to accounts receivable, allows you to assess the level of accounts receivable and its dynamics. It is calculated using the following formula:

where is the share of working capital advanced to accounts receivable, - average amount of accounts receivable in the period; SS- the average amount of current assets of the enterprise in the period.

Index circulation period receivables or, as it is sometimes called, the receivables collection period characterizes the impact of receivables on the financial cycle of the enterprise:

Where - receivables circulation period, days; S - sales volume of the enterprise for the period; T is the duration of the period.

Accounts receivable turnover (speed of circulation receivables) () shows how many revolutions the working capital advanced into receivables makes during a certain period. This indicator is calculated using the formula:

Species proportion coefficients receivables in the total amount of receivables and the period of their occurrence (“age”) allow us to assess the quality of receivables. To calculate these ratios, it is necessary to first determine the amounts of receivables related to overdue debts, and from them - the amounts of bad and doubtful debts, respectively. Note that obtaining this data is the most difficult when calculating the coefficients under consideration, since it requires detailed, systematically carried out, analytical accounting on the part of the enterprise. The method for calculating coefficients is simple and clear:

where is the coefficient of the share of the type of receivables in the total amount of receivables, is the average amount of overdue, bad or doubtful debts in the period.

The average period of occurrence of overdue, doubtful or bad debts ( determined using a method similar to that used to determine the period of circulation of receivables:

Also at this stage of implementing the receivables management algorithm, it is advisable to determine absolute And relative effect from capital advances to accounts receivable. To do this, compare the amount of additional profit received by the enterprise by increasing sales volume by providing deferred payment with the additional costs of advancing capital and servicing the increase in accounts receivable and the amount of bad debts. Absolute effect calculated by the formula:

where is the absolute effect of advancing capital to accounts receivable; - change in profit received by the enterprise by increasing sales volume by providing deferred payment for the period; additional costs for capital advances and servicing the increase in accounts receivable for the period; OR - the average amount of bad debts in the period.

Relative Effect of Advancing Capital to Accounts Receivable(allows you to evaluate the effectiveness of accounts receivable management. It is calculated using the formula:

The considered system of indicators allows us to assess the quality of accounts receivable as a whole, however, for the current, everyday work of a financial manager, this data is not enough, since it is unclear which debtor needs to be influenced. In this regard, within the framework of corporate finance, such a tool for analyzing receivables was developed as accounts receivable aging register. It is based on the distribution of the debt of each debtor according to the period of occurrence.

Table 4.4 – Accounting data for debtors of the Russian Kamen company for the fourth quarter

Debtor's name	Shipping date	Amount of debt on the invoice, rub.	date of payment	Debt as of December 31, rub.	Debt period as of December 31
Company Your kitchen	20.10		29.11	No	Repaid
25.10		04.12	No	Repaid
23.11		02.01
29.11		08.01
10.12		19.01
Total for the company Your kitchen	X		X		X
Company Cozy home	03.12		12.01
15.12		24.01
30.12		08.02
Total for the company Cozy home	X		X		X
Total	X		X		X

If accounting is automated, then using software you can easily determine the period of debt on the basis of each specific invoice and then analyze the receivables according to the period of occurrence. For the company Russian stone The results of this analysis are presented in Table 4.5.

According to Table 4.5, the company Russian stone does not have overdue receivables, however, in the current situation, attention must be paid to debt with a maturity of 30-40 days, since the date of its repayment is approaching and untimely receipt of funds, accounting for 23% of all receivables, will most likely have an adverse effect on the financial condition enterprises.

As can be seen from the example, the method of analyzing receivables by the timing of their occurrence allows you to control individual debtors, and the analysis of changes in their debt over time allows you to obtain much more information than when using receivables turnover indicators. At the same time, this method does not allow us to reliably assess the degree of debtors’ compliance with payment discipline in the event of sharp fluctuations in sales volume or a steady trend of its decrease or increase. In this case, it is advisable to use a receivables analysis tool such as statement of outstanding balances. A sample of this statement is presented in Table 4.6.

Table 4.5 - Accounting data for debtors of the Russian Stone company for the 4th quarter

Name of debtor/due date of debt	0 - 10 days	11 - 20 days	21-30 days	30 - 40 days	More than 40 days	Total amount of debt to debtors, rub.	Share of the debtor's debt in the total amount of debt
Company Your Kitchen	X	X		80 000	X		0,51
Cozy Home Company				X	X		0,49
Total					X		1,00
Share of receivables by age in the total amount	0,14	0,29	0,34	0,23	X

Table 4.6 – Statement of outstanding balances of the company Russian stone

Period	Sales revenue, rub.	Accounts receivable at the end of the quarter arising in the month of sales, rub.	Percentage of accounts receivable from monthly sales volume
October
November
December
Total IV quarter	X
January
February
March
Total Q1	X
April
May
June
Total II quarter	X
July
August
September
Total III quarter	X

The formation of a statement of outstanding balances begins with the separation of monthly debt from the total amount of receivables at the end of the quarter; then the share of this debt in the sales volume for that month is calculated. For example, according to Table 4.3, in October the company sold goods worth 100,000 rubles, funds to pay for these supplies were received in full during the fourth quarter, therefore, there are no receivables generated in October, but as of December 31, in November, the sales volume amounted to 80,000 rubles, while payment for goods sold, according to the terms of the contract, will only be received in January, therefore, as of December 31, the receivables that arose in November will amount to 80,000 rubles, or 100% of the November sales volume, etc. Then, by comparing the amounts of outstanding debt balances for quarters, we can conclude that there has been a change in the payment discipline of debtors. Thus, according to Table 4.5, in the IV, I and III quarters, the amount of outstanding debt balances remains unchanged and amounts to 200%, but in the second quarter this figure is 112%, which indicates an acceleration in the receipt of funds from debtors in this quarter.

The statement of outstanding balances is used not only to monitor the payment discipline of debtors, but also to plan the amount of receivables in upcoming periods.

The next stage of the receivables management algorithm involves the selection of tools with the help of which the direct receivables management will be carried out. Modern financial science offers many such methods and tools, and depending on their functional purpose they can be grouped as follows:

Investment methods and tools;

Collection methods and tools;

Refinancing methods and tools.

The results of using these methods and tools depend on several factors: the traditions that have developed in a particular industry; the degree of influence of the company on the product market; reliability of marketing information; availability and cost of financial sources; type of credit policy chosen; the relationship between cost and product price.

Let us remember that under accounts receivable management method is understood as a set of techniques or operations subordinated to solving specific problems, and gender tool - an agreement or any regulation, as a result of which the status of receivables will change.

Another most important stage in accounts receivable management is the regulation of the use of these methods and tools and the formation of the enterprise’s credit policy.

Natalya Vakhrushina (leading consultant at Cogito MC)

Magazine "Financial Director" No. 5 (May) 2005

To manage accounts receivable, a company needs various information about debtors and their payments. Typically, such information can be obtained by refining the accounting system. However, before you begin to finalize the system, you should determine the principles of accounting and control of receivables.

The receivables management problems that businesses face are quite typical:

there is no reliable information about the timing of repayment of obligations by debtor companies;
work with overdue receivables is not regulated;
there is no data on the increase in costs associated with an increase in the size of accounts receivable and the time of its turnover;
the creditworthiness of buyers and the effectiveness of commercial lending are not assessed;
the functions of collecting funds, analyzing accounts receivable and making decisions on granting credit are distributed among different departments. At the same time, there are no regulations for interaction and, as a result, there are no people responsible for each stage.

Example 1 Let's consider the algorithm for managing receivables using the example of the fictitious enterprise Posrednik LLC1. This company purchases large quantities of goods from the supplier on an advance payment basis with their subsequent retail sale on an installment plan. The reports that the accounting system allows you to generate are presented in summary table 1. Such a report in its content corresponds to the reports compiled by the most typical accounting systems. Obviously, based on these data, only the total balance of the buyer's receivables can be determined. But this does not provide any information about how much of the receivable is overdue or when payments should be expected to arrive.

Let's take a closer look at ways to solve these problems, as well as the main elements of an accounts receivable management system.

Table 1 Summary of data on the current debt of Buyer LLC as of 02/12/05

Documentation

№

date

Amount, thousand rubles

Invoices

103

25.12.04

100

109

27.12.04

600

141

03.01.05

650

Total

1350

Money orders

245

18.01.05

252

20.01.05

265

22.01.05

278

23.01.05

300

06.01.05

200

312

16.01.05

200

321

22.01.05

100

345

23.01.05

356

29.01.04

362

22.01.05

450

370

30.01.05

150

Construction of a system for accounting and control of accounts receivable

To manage accounts receivable1, the following information is needed:

data on invoices issued to debtors that have not been paid at the moment;
time of overdue payment for each invoice;
the amount of bad and doubtful accounts receivable, assessed on the basis of established internal company standards;
credit history of the counterparty (average period of overdue, average loan amount).

Personal experienceAnton Khodarev, It is recommended that when managing accounts receivable, you also take into account data on companies that have debt to your debtor. It often turns out that it is possible to offset and pay off your accounts payable obligations against receivables. In our company, such offsets repay about 5-6% of current receivables. In most cases, such information can be obtained by adjusting the accounting system settings. But before you begin to finalize the standard settings of accounting programs, you should determine the principles for monitoring the timing of fulfillment of obligations by debtor companies.

Table 2 Critical payment deadline for invoices issued for Buyer LLC as of 02/12/05

Invoice no.	date	Amount, thousand rubles	Shipping date	Cost of shipped products, thousand rubles.	Terms of payment	Travel time, days	Deferment under the contract, days.	Critical payment deadline
103	25.12.04	100	27.12.04	100	From date of receipt	12	5	13.01.05
109	27.12.04	600	29.12.04	200	From date of shipment	-	10	08.01.05
			29.12.04	200		-	15	13.01.05
			29.12.04	150		-	20	18.01.05
			29.12.04	50		-	25	23.01.05
141	03.01.05	650	08.01.05	650	From date of receipt	2	10	20.01.05
141	03.01.05	650	09.01.05	150	From date of receipt	12	10	31.01.05

Table 3 Report on the write-off of accounts receivable from Buyer LLC as of 02/12/05

Invoices issued		Payment orders received		Current debt as of the date of receipt of payment, thousand rubles.	Overdue period, days
№	Critical payment deadline for the invoice	date	Amount, thousand rubles		Overdue period, days
103	13.01.05	18.01.05	16	100	5
		20.01.05	20	84	7
		22.01.05	50	64	9
		23.01.05	14	14	10
109	08.01.05	06.01.05	200	200	2-1
	13.01.05	16.01.05	200	200	3
	18.01.05	22.01.05	100	150	4
	18.01.05	23.01.05	50	50	5
	23.01.05	29.01.04	50	50	6
141	20.01.05	22.01.05	450	450	2
141	31.01.05	30.01.05	150	150	-1
<1>A negative period of delinquency means that the buyer made payment before the critical payment deadline.

Determining the critical payment deadline

The critical payment deadline is the date no later than which payment on the granted commercial loan must be made. In order to be able to control the critical payment deadline, you need to take into account the duration of the deferred payment, as well as the date of occurrence of the receivables. The moment of occurrence of receivables is the date of transfer of ownership of the product from the seller to the buyer, established in the contract. This may be the date of signing the contract, shipment of the goods from the seller’s warehouse, the date of receipt of the products by the buyer, etc.

In most contracts for the supply of goods with installment payment, the critical payment period is determined by adding a specified number of days to the date of occurrence of the receivable. To simplify the calculation of the critical payment period, it can be recommended to highlight the conditions for granting deferred payment that are typical for the company and implement the possibility of taking them into account in the accounts receivable management system.

It should be noted that in any company, cases may arise when contracts are concluded whose payment terms differ from the standard ones. In this case, it is very important not to use standard conditions in accounting that will distort reporting on the repayment of receivables, but to divide the amount of the invoice issued under this agreement into such a number of component amounts that it is possible to unambiguously calculate the critical payment period for each of them.

Example 2 The standard condition for the shipment of products in installments in the company Posrednik LLC is payment for the delivered products within the number of days established in the contract from the date of receipt of the goods at the buyer’s warehouse or from the date of shipment of the goods from the warehouse. In accordance with the standard conditions for granting deferred payment, the accounts receivable management system implemented the ability to take into account the deferred payment period and the time the goods were in transit (see Table 2). Based on the data in table. 2 sales managers responsible for the receipt of receivables can monitor the timeliness of payments and, if necessary, respond to the occurrence of overdue obligations on the part of debtors.

The procedure for correlating received payments with issued invoices

Accounts receivable management is complicated by cases when several issued invoices are repaid with one payment order or, conversely, when one invoice is repaid by several payment orders. In this case, it is not always clear what the debtor paid for and which of the invoices is overdue. Unless the customer's payment purpose specifies otherwise, we recommend using the FIFO method, which means that customers are considered to pay the earliest outstanding invoice first.

Personal experienceAnton Khodarev We have no problems with the distribution of incoming payments. For each shipment, we enter into an additional agreement to the supply contract and require clients to indicate its number and date in the payment order. But for framework agreements, when additional agreements are not concluded and products of the same name are supplied, the use of the FIFO method when correlating issued invoices and received payments is justified. Having determined the critical payment deadline and the principles for correlating incoming payments and issued invoices, it is easy to understand what the share of overdue receivables is and how many days it is overdue. Based on these data, it is possible to estimate the increase in costs associated with the unplanned diversion of funds from the company’s turnover (the cost of raising funds), as well as justify the amount of penalties included in the contract.

Example 3 At Posrednik LLC, in order to control the receipt of payments and maintain statistics on the average delinquency for each debtor, a report on the write-off of receivables is generated (see Table 3). The table shows that for the account, the critical payment deadline for which is January 13, 2005, the buyer made payment in four payment orders. Moreover, the first money transfer took place five days late, and the last payment ten days late. The weighted average period of delay was 8.1 days. At an average rate of 14% per annum (0.04% per day), at which the company raises funds, the costs associated with late payment on only one invoice will amount to 722 rubles. (0.04% x x (100 thousand rubles x 5 days + 84 thousand rubles x 7 days + 64 thousand rubles x 9 days + 14 thousand rubles x 10 days). If Taking into account the fact that the company has not one issued invoice, but several thousand, then the costs of servicing overdue receivables will amount to a significant amount.

Table 4 Accounts receivable collection register as of 02/12/05

Invoice no.	Invoice amount, thousand rubles.	Critical payment deadline	Payment receipt date	Amount of payment received during the period, thousand rubles.
Invoice no.	Invoice amount, thousand rubles.	Critical payment deadline	Payment receipt date	0 days	up to 7 days	up to 30 days	up to 60 days	over 60 days
LLC "Client"
146	350	12.01.05	12.01.05	50
			17.01.05		100
			18.01.05		50
			27.01.05			100
			12.02.05				50
147	190	15.01.05	04.02.05			190
*Total*	540			50	150	290	50	0
*IN %*	100			9	28	54	9	0
Total for all debtors	5500			2600	950	750	550	650
Structure of accounts receivable, % (collection ratio)	100			47	17	14	10	12

The main tool for controlling accounts receivable is the accounts receivable aging register. The aging register is a table containing unpaid invoice amounts, which are grouped by periods of delinquency. Grouping is carried out based on the company's policy in the field of lending to counterparties. For example, the company’s management may believe that a delay in payment of seven days is acceptable; if this period is exceeded, it should actively work with the counterparty to return the receivables, and in case of a delay of more than 30 days, go to court. Accordingly, the groups in the accounts receivable aging register will be constructed in a similar way: 0-7 days, 8-15, 16-30, over 30.

Personal experienceNatalia Yakhnova, financial director of the company "Inmarko" (Novosibirsk) To make it easier to monitor the fulfillment of obligations by debtors, we create a register of aging receivables. Accounts receivable are grouped according to the period of overdue payment: - up to 5 days; - up to 14 days; - up to a month; - up to 2 months; - over 2 months.

It can be recommended to compare the weighted average time of delay and credit period for the debtor and for the company as a whole with similar indicators for previous periods. In order for the comparison to be correct, it is necessary to exclude from the calculation of the weighted average time of delay in payment accounts for which the receivables are currently recognized as uncollectible. Failure to exclude bad receivables from the calculation will result in all bad debts incurred in previous periods and not written off by the company being reflected in the current period, which will not allow for a fair comparison. A comparison of the weighted average time of delay and lending of the current and reporting periods will allow us to assess the effectiveness of the company’s commercial lending policy. Obviously, an increase in the weighted average period of arrears in the current period will indicate low efficiency in working with debtors, and vice versa.

Planning receipt of funds from debtors

Using data on the average time of late payment by counterparties and for the company as a whole on already repaid accounts, you can significantly increase the accuracy of planning the receipt of funds from debtors. This simplifies the procedure for constructing a cash flow budget in terms of forecasting cash receipts. We recommend using accounts receivable collection ratios to predict the receipt of payments from customers. The collection ratio is defined as a percentage of the total payment amount in a certain time interval (see Table 4).

The weekly plan for cash receipts (other time intervals can be used - decades, months) is constructed by multiplying the obtained collection ratios by the planned sales volume. Based on information about the receipt of funds, it is possible to accurately predict cash gaps and plan for attracting additional financing.

Personal experienceAnton Khodarev It can be recommended to calculate collection ratios in terms of not only the company’s clients, but also the range of products shipped. This is due to the fact that the turnover period for different product items is different, and the terms for returning funds will vary accordingly.

Example 4 To calculate collection ratios, Posrednik LLC creates a register of collection of receivables for each debtor and for the company as a whole (see Table 4). As can be seen from table. 4, Posrednik LLC receives 47% of payments as an advance payment, and 53% after the goods have been shipped. Of these, 17% should be expected within the first week, 14% within a month, 10% within two months, and 12% will be paid even later. Let’s say that in the first week of March, Posrednik LLC plans to sell products worth 500 thousand rubles. Based on the calculated collection ratios, we can predict the following terms for the receipt of funds by the company: - prepayment - 235 thousand rubles. (47% of 500 thousand rubles); - up to 7 days - 85 thousand rubles. (17%); - up to 30 days - 70 thousand rubles. (14%); - up to 60 days - 50 thousand rubles. (10%); - over 60 days - 60 thousand rubles. (12%).

Personal experience Natalya Timofeeva, Financial Director of Aerwell CIS (Moscow) Our company sells products through a dealer network distributed throughout Russia. One of the forms of working with dealers is the provision of trade credit. Each dealer has a receivables limit and terms for providing trade credit. To plan the receipt of funds from debtor companies, the time of repayment of receivables is taken into account, and statistics on violation of the terms specified in the agreement are kept for each debtor. As a rule, late payments do not exceed several days. Therefore, the time of receipt of funds from the debtor is determined as the repayment period of the debt under the contract plus the average time of delay. Natalia Yakhnova When planning the annual receipt of funds from debtors, the calculation is made by the planning and economic department based on the receivables turnover ratio for each product sales channel. With operational planning (rolling planning for three months in advance), the receipt of funds is calculated individually for each major client by the sales service, and the economic planning department only checks the final figures for their deviation from the turnover standard (established during annual planning).

Development of credit policy

The process of managing receivables is impossible without a credit policy - a set of rules governing the provision of commercial credit and the procedure for collecting receivables. The credit policy is adopted for a year, after which the goals and objectives, adopted standards, approaches and conditions are clarified. According to Anton Khodareva, at the Russian Coal company, the credit policy is reviewed quarterly. Here is the typical structure of this document:

Credit policy goals.
Type of credit policy.
Buyer evaluation standards.
Divisions involved in accounts receivable management.
Personnel actions.
Document formats used in the accounts receivable management process.

Objectives of the current credit policy

The goals of credit policy should be to increase the efficiency of investing funds in accounts receivable, increase sales volume (profit from sales) and return on investment.

In addition to formalizing the goals of managing receivables in the credit policy, it is necessary to define tasks, the solution of which will allow achieving target values (for example, entering new markets, winning a larger share of the existing market, building a reputation, minimizing the cost of credit resources). Each formulated task must have a quantitative measurement and deadlines.

Personal experienceNatalya Timofeeva Our company practically does not work on trade credit terms with new buyers who have no credit history. And before providing a loan and judging for what amount and term it will be provided, we require a complete package of financial documentation from the dealer. Businessmen also go to the site and assess market opportunities.

Type of credit policy

It is customary to distinguish three types of credit policies:

conservative;
moderate;
aggressive.

Buyer Evaluation Standards

Buyers, as a rule, have different capabilities in terms of purchase volumes, timely payment and apply for different conditions for providing deferred payment.

In order to differentiate the terms of commercial lending, but at the same time avoid abuse on the part of sales managers, it is necessary to develop an algorithm for assessing buyers.

Creating an algorithm for differentiating the conditions for granting deferred payment involves performing a number of steps.

1. Selection of indicators on the basis of which the counterparty’s creditworthiness will be assessed (timely repayment of previously granted deferred payments, business profitability, liquidity, size of net current assets, etc.).

2. Determining the principles for assigning credit ratings to the company's clients. The rating is assigned for a certain period, after which it must be reviewed, for example, once a month.

3. Development of credit conditions for each credit rating, that is, determination of: - selling prices; - time of deferment of payment; - the maximum size of a commercial loan; - systems of discounts and fines.

Example 5 As the two most important characteristics of the buyer’s creditworthiness, the management of Posrednik LLC identifies payment discipline and sales volume (in monetary terms) in previous periods (see Table 5). First, clients are ranked by payment discipline. Those receiving a “D” or “E” rating are not allowed to be ranked by sales volume. For companies that have received ratings “A”, “B” and “C”, the following working conditions are recommended: - rating “C”: work with such a company only if there is a deposit; - rating “B”: mandatory description in contracts of a system of fines and penalties and their strict implementation; - rating “A”: provision of deferred payment without the use of sanctions on the part of the company. Based on the supply volume rating, the maximum allowable volume of trade credit and prices for products sold are determined. For example, for a company with a supply volume rating of “B”, the amount of a trade loan should not exceed 50 million rubles. per year, and the sales price is set 5% below the base one; for an “A” rating, the credit limit is no more than 100 million rubles. per year, and the price is 10% lower than the base one. Such ranking is convenient in everyday activities for making operational decisions.

When it is necessary to make a strategic decision, for example, when choosing the most promising of two buyers, a wider range of factors should be taken into account than the volume of purchases and payment discipline. Indicators such as profitability of sales and the prospective volume of sales to the buyer can be used. It is also important to consider non-quantitative characteristics: the client’s reputation in the market and the existence of guarantors (providers). To conduct a comprehensive assessment of the strategic attractiveness of a particular client, scoring systems for assessing the indicators listed above can be used.

Personal experienceAnton Khodarev It can be recommended to provide the company's clients with information about the principles for assigning ratings and credit conditions for each rating. This will further motivate your customers to fulfill their obligations in a timely manner.

Levels of responsibility

Sections 4-6 of the credit policy are designed to differentiate the levels of receivables management. It is necessary to strictly distribute responsibility for managing accounts receivable between commercial, financial and legal services. Often, different departments with conflicting responsibilities are responsible for sales and debt collection. For example, a sales manager (commercial department) is motivated to sell as much as possible, and a debtor relations manager (financial service) is motivated to receive funds and minimize the level of debt. This leads to customer dissatisfaction and departmental conflict.

A scheme for distributing responsibility is justified, in which the commercial service is responsible for sales and receipts, the financial service takes on information and analytical support, and the legal service provides legal support (drawing out a loan agreement, working to collect debt through the court). According to Natalya Timofeeva, in their company all work with the debtor is carried out by the merchant, but if payment is not received two or three days before the payment deadline, then the debtor is transferred to the responsibility of the assistant to the financial director for accounts receivable. His responsibilities include drafting warning letters, telephone conversations and other preventive work. All this allows us to avoid the need to resolve the issue of collecting receivables in arbitration court.

It is necessary not only to distribute responsibilities between departments, but also to describe the actions of all employees involved in managing accounts receivable.

Example 6 The responsibility of the employees of Posrednik LLC is enshrined in the receivables management regulations (see Table 6).

Table 6 Debt management regulations at Posrednik LLC

Accounts receivable management stage	Procedure	Responsible person (department)
The critical payment deadline has not arrived	Conclusion of an agreement	Sales Manager
	Shipment control	Commercial Director
	Invoicing	Financial service
	Shipment notifications (numbers of wagons, vehicles, dates, weight)
	Notification of the amount and estimated repayment terms of receivables
	2-3 days before the critical payment deadline - a call with a reminder of the end of the deferment period, and, if necessary, a reconciliation of amounts
Overdue up to 7 days	If payment is not made on time, a call will be made to clarify the reasons and a payment schedule will be created.	Sales Manager
	Termination of supplies (before payment)	Commercial Director
	Sending a warning letter regarding the accrual of a fine	Financial service
Overdue from 7 to 30 days	Calculation of a fine	Financial service
	Pre-arbitration warning	Legal department
	Daily reminder calls	Sales Manager
	Negotiations with responsible persons	Sales Manager
Overdue from 30 to 60 days	Business trip of the responsible manager, taking all possible measures for pre-trial settlement	Sales Manager
Overdue from 30 to 60 days	Official complaint (by registered mail)	Legal department
Overdue for more than 60 days	Filing a claim in arbitration court	Legal department

Personal experienceNatalia Yakhnova Based on reports on the critical maturity of receivables, trade managers monitor the settlement situation on a daily basis. Part of their salary depends on the timely payment of accounts receivable. The financial service forms the basic principles of accounts receivable management - limits, terms, conditions for granting a loan, control of repayment. If the delay is more than 30 days, then information about this is transferred to the head of the sales service for control. At a certain stage, a claim is made, and the security service and legal department are involved.

Anton Khodarev Our company's credit policy and wage regulations describe the responsibilities of sales managers and the principles of bonuses. If it turns out that payment from customers did not arrive due to the manager’s fault, the company may fine him or demand compensation for part of the losses.

Automation of accounts receivable management

In our opinion, for a medium-sized enterprise it is acceptable to create a program for accounting and monitoring receivables in Access. In a company conventionally called Posrednik LLC, the accounts receivable management system was created in Access. This turned out to be quite enough to control accounts receivable for 600 clients, with about 20-30 invoices issued daily. Obviously, in order for the system to work, it is necessary to constantly update data on payments, shipments made, etc.

Personal experienceAnton Khodarev We currently account for accounts receivable in Access and Excel. Data on debtors is downloaded automatically from 1C. However, it must be said that with a sufficiently large number of clients and daily overhead resources, Access is not enough. Therefore, we plan to implement a specialized information system developed to our order. But to test the accounts receivable management system before implementing cumbersome ERP-class systems, you need to try to implement the developed accounting rules in Excel or Access.

Alexey Fedoseev, Director of Information Projects at Intalev Company (Moscow) If there are more than a hundred customers or the number of shipments per day is more than five, keeping records of all information on accounts receivable in Excel becomes economically unjustified. In this case, the problem is not even the higher costs of manual accounting, but the cost of incorrect data entry and the speed of providing results. When automating accounts receivable management, several issues must be resolved before implementation. It is necessary to determine what information management needs to control and analyze receivables debt, and also try to take into account plans for changing sales methods (shipments) and the conditions for granting deferred payment. In addition, a number of technical issues should be resolved, on the basis of which the specialists of the automation company will be able to understand what kind of productivity the information system should have. may include: - the number of accounting transactions per day; - the number of employees involved in the system; - requirements for the volume of the data archive; - the need for integration with other software products used in the company. Almost every ERP information system has sufficient functionality for. accounts receivable management, and the only question is the competent formalization of requirements and configuration. During the implementation of the system, it is necessary to analyze all processes associated with payment, shipment and invoicing in order to exclude the possibility of their implementation without monitoring limits and accepted regulations for managing receivables.

Alexander Antipov, Director of Business Development for SMB at SAP in the CIS and Baltic countries (Moscow) One of the main requirements for an accounts receivable management information system is the ability to structure customers into groups according to the degree of reliability. To assess the reliability of a particular debtor, it is necessary to study statistical data characterizing the completeness and timeliness of debt repayment in previous periods. The information system with which accounts receivable is managed must take into account the date of recognition of receivables, the terms of shipment for each counterparty, as well as the deadline for fulfilling obligations. Modern information systems, in addition to the above, make it possible to: - automatically send letters with a warning about payment deadlines and information about what measures will be applied to the debtor in case of failure to fulfill obligations on time; - automatically block shipment if the limit is exceeded or the period of delay in fulfilling obligations for a previous delivery exceeds the permissible values; - charge penalties and fines based on contractual terms; - promptly update data on the status of accounts receivable and receipt of payments from debtor companies. The main reason why many companies have abandoned accounting and control of accounts receivable in Excel is due to the difficulty of quickly updating data and setting up mandatory approval procedures. Let's consider a typical situation in a trading company, in which the accounting department handles payments and reconciles balances with customers, and sales managers handle shipments. Managers have to coordinate each shipment with accounting to prevent exceeding credit limits. And the accounting department, in turn, must always have up-to-date data on the client’s debt. This additional approval step can lead to possible human errors and unnecessary stress due to conflicts of interest. A way out of this situation can be automatic control over accounts receivable in a comprehensive company management system. When choosing a system for enterprise automation, you need to check whether it includes standard accounts receivable management tools, which in the future will only need to be customized to the specific requirements of the company. An example of such systems are solutions for managing small and medium-sized businesses offered by SAP. It should be noted that when implementing a particular automated system, it is very helpful to have an accounts receivable management module in it, which only needs to be configured to the specific needs of the company. This approach is implemented in SAP. This saves time and money.

Natalya Timofeeva Our company uses our own software, which covers all departments of the enterprise, including a module for accounting and control of accounts receivable. The system provides a warning program for exceeding limits and deadlines for fulfilling obligations. Nikolay Koltsov, senior consultant of the consulting department of the VDGB company (Moscow) In our company, the accounts receivable management module is implemented in the standard version “1C: Manufacturing Enterprise Management 8.0”. The system allows you to take into account the significant terms of supply contracts (deferred payment period, moment of recognition of receivables, etc.). Control of accounts receivable can be carried out in the context of contracts, as well as issued invoices and shipping documents. It is also possible to attribute received payments to issued invoices using the FIFO, LIFO methods, or as a result of the user’s direct indication of the account to which the received payment should correspond. To control the timing of fulfillment of obligations by debtors, there is a standard report on the aging of receivables (accounts receivable by intervals). You can also configure the option to block invoicing and shipments when the established limits are exceeded.

Practitioners' opinions

Andrey Aksenov, Executive Director of JSC Khlebprom (Chelyabinsk)

The approaches to accounts receivable management outlined in the article (taking into account the critical payment period, calculating collection ratios) require analytics for each issued invoice and therefore will be useful for the enterprise, provided that the number of shipments per day is relatively small. Otherwise, the work of introducing all the necessary analytical features will take too much time, and such costs will most likely not be justified.

In our company, the number of debtors amounts to hundreds, products are shipped to each of them daily, so a different approach is used to control receivables. For each customer, data on the shipment of products and their payment are promptly entered into the computer. Thus, operational information is generated on accounts receivable for each customer, both in monetary terms and in days (in relation to the average daily shipment). In this case, the total amount of the buyer’s receivables is divided into three groups: up to 10 days (normal amount of receivables), from 10 to 20 days (increased amount of receivables) and over 20 days (overdue receivables). When accounts receivable leave the first group, work begins with the buyer to reduce it.

It should also be said about the goals of the company's credit policy. Of course, it is very important to improve the efficiency of investing in accounts receivable. But if the process of managing commercial lending is considered from a long-term perspective, then customer loyalty must come first. In this case, the decision on the deferred payment period must be made taking into account all the terms of the product supply agreement. For example, in our company, when establishing a deferred payment to a specific buyer, the terms of the product supply agreement must be taken into account, such as the amount of the discount, the permissible amount of returns of unsold products, the amount of occupied retail space, and the breadth of the range of supplied products. Moreover, all these conditions are considered together. For example, you can increase the discount and at the same time reduce the amount of deferred payment, or increase the deferred payment, reducing the permissible amount of returns of unsold products.

Anton Khodarev, Financial Director of the company "Russian Coal" (Moscow)

The presented material will be useful to those companies that are planning to create a system for targeted management of receivables. The article outlines the main approaches to accounting and management of accounts receivable, which can be implemented at any enterprise. Of course, the proposed methodology will need to be modified taking into account the specifics of the enterprise’s work with its clients.

Irina Gridneva, Financial Director of Louis Dreyfus Vostok LLC

The methodology for accounting and managing receivables proposed in the article will certainly be useful for small enterprises. But it should be noted that the approaches outlined are more focused on making tactical decisions in the field of accounts receivable management. In my opinion, this can be achieved without building cumbersome accounting systems. It is much more important to resolve strategic issues of accounts receivable management, namely, to develop and formalize three blocks: the procedure for granting a loan (deferred payment), methods for monitoring overdue accounts receivable and analyzing its impact on the company’s financial results. Only after this will management of receivables be targeted and systematic.

Principles of accounts receivable management. Accounts receivable management Basic principles of accounts receivable management

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1.3. Accounts receivable management methods

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