Surprisingly, management of this multi million (or multi billion) vietnam dong asset rarely receives much senior management attention, except when a serious problem develops

CHAPTER INTRODUCTION 1.1 Problem statement: Today, when Vietnam is going to market economy, three different types of business that operated for profit: manufacturing, merchandising, and service business are more growing up rapidly Each type of business has unique characteristics Manufacturing businesses change basic input into products that are sold to individual customers, such as Thai Tuan Textile and Garment Corporation, Dong Tam Joint Stock Corporation…Merchandising businesses also sell products to customers However, rather than making the products, they purchase them from other businesses (such as manufacturers) In this sense, merchandisers bring products and customers together, such as 3A Pharmaceutical Co., Ltd - Abbott Authorized Distributor, Thuy Loc Co., Ltd - Shiseido Authorized Distributor in Viet Nam or Metro Cash & Carry… Service businesses provide services rather than products to customers, such Equinox Hair & Beauty, YKC Beauty Spa… One of the key factors underlying the growth of the Vietnam economy is the trend toward selling goods and services on credit Because, in today’s global marketplace, competitive pressure and industry practice mandate that products and services be on a credit vs cash-on-delivery basis This practice often produces a receivable asset is one of the largest tangible assets on a company’s balance sheet A review of the 2004 Fortune 500 certainly reveals this truth Receivables ranked among the top three tangible assets for 75% of the top 100 companies Surprisingly, management of this multi-million (or multi-billion) Vietnam Dong asset rarely receives much senior management attention, except when a serious problem develops The custodians of the receivables asset are similar to umpires of a football game; they are not noticed unless they a bad job As you see above, merchandising is the type that is less complicated than manufacturing, but more complex than service So we choose merchandising business Page of 54 to discuss the importance of receivable management This is the AAA Pharma Co., Ltd – John & John Authorized Distributor in Viet Nam 1.2 Significance and contribution of the thesis: It can be argued that revenue generation is the most critical function of a company Any business tries to expense their substantial resources to generate increasing levels of revenue But this revenue must be converted into cash since cash is lifeblood of a company In the result, every Vietnam Dong of a company’s revenue becomes a receivable that must be managed and collected 1.2.1 Benefits to the society: The good receivable management can be able to: • Decrease the risk of bankruptcy from receivable failure • Increase the trading environment well among business because of higher credit 1.2.2 Benefits to the business: Effectively managing the receivables asset is: 1.2.3 • To Increase cash flow • To get higher credit sales and margins • To reduce bad debt loss • To get lower administrative cost in the entire revenue cycle • To decrease deductions and concession losses • To decrease administrative burden on sales force • To enhance customer service Benefits to myself: Doing my thesis for two months, I get deeply inside receivable management It let me know how it affects on cash flow, runs effectively, and also gives more ways to improve cash inflow It means that the way I can increase revenue, enhance customer satisfaction and reduce expense 1.3 Objectives of the thesis: After studying in real case, you may know how receivable management is important by Page of 54 • Identifying accounts receivable in merchandising business • Describing how accounts receivable are recognized, valued and disposed in the accounts • Interpreting the statement presentation and analysis of receivable • Illustrating receivable asset management effectively • Optimizing receivables • Providing proven principles for achieving benefits such as increased cash flow, higher margins, and a reduction in bad debt loss • Supporting technology 1.4 Scope of the thesis: 1.4.1 By time: AAA Pharma has expended their business more than ten years with many changes in receivable management Because of limit time, I just focus within two years to analyze and improve it for current and coming year 1.4.2 By space: AAA Pharma has not only a head quarter at Ho Chi Minh City but also many branches in all three areas in Vietnam: Ha Noi, Da Nang, Can Tho, Nha Trang, Hai Phong, Dong Nai, Nghe An and a representative office in Hue Because of limit space, my major is receivable management at head quarter in Ho Chi Minh City 1.4.3 By topic: The focus is primarily on commercial receivables management (business to business, and business to consumer) and fast-growing consumer product Page of 54 CHAPTER LITERATURE REVIEW i Identify account receivables in merchandising business: 2.1.1 Types of receivables: The term “receivables” refers to amounts due from individuals and other companies They are claims that are expected to be collected in cash Receivables are frequently classified as (1) accounts, (2) notes, and (3) other Accounts receivable are amounts owned by customers on account They result from the sale of goods These receivable generally are expected to be collected within 30 to 60 days They are the most significant type of claim held by a company Notes receivable are claims for which formal instruments of credit are issued as proof the debt A note receivable normally extends for time periods of 60-90 days or longer and requires the debtors to pay interest Notes and accounts receivable that result from sale transactions are often called trade receivable Other receivables include nontrade receivables Examples are interest receivable, loans to company officers, advances to employees, and income taxes fundable These are unusual Therefore they generally classified and reported as separate items in the balance sheet 2.1.2 Reasons to offer credit: (chấp nhận cho nợ) Most of companies want to sell for cash at that time they provide goods because cash sales are normally rung up on a cash register (cashbox) and recorded in the accounts But competitive pressure in the world economy mandates that goods are sold on credit as promotion, customer convenience You may thinks this credit they offer is to bring more benefits only for customers That is not enough The more customers you have, the more profit you earn and the higher market share you get in competitive pressure Credit had existed in business environment for long time ago; therefore it is available to customers and become a criterion they make buy decision Page of 54 ii Three primary accounting issues are associated with accounts receivable: 2.2.1 Recognizing accounts receivable: Every sales transaction should be supported by a business document that provides written evidence of the sales A sales invoice provides support for a credit sale Two entries are made for each sale The first entry records the sale: • Accounts receivable is increased by a debit • Sale is increased by a credit The second entry records the cost of goods sold: • Cost of goods sold is increased by a debit • Merchandise inventory is decreased by a credit 2.2.2 Valuing accounts receivable: (đánh giá khoản phải thu) Once receivables are recorded in the accounts, the next question is: how should receivables be reported in the financial statements? They are relatively liquid assets, usually converting into cash within a period of 30 to 60 days Therefore accounts receivable from customers usually appear in the balance sheet as current asset But determining the amount to report is sometimes difficult because some receivables will become uncollectible Reflecting Uncollectible Accounts in the Finance Statements Each customer must satisfy the credit requirements of the seller before the credit sale is approved Inevitably, though, some accounts receivable become uncollectible For example, one of your customers may not be able to pay because of a decline in sales due to a downtown in the economy Similarly, individuals may be laid off from their jobs or be faced with unexpected hospital bills Credit losses are recorded as debit to Bad Debts Expense (or Uncollectible Accounts Expense) Such losses are considered a normal and necessary risk of doing business on a credit basis Two methods are used in accounting for uncollectible accounts: Page of 54 2.2.2.1 Direct write-off Method for Uncollectible Accounts: (phương pháp xóa sổ nợ khó đòi) When a particular account us determined to be uncollectible, the loss is charge to Bad Debts Expense The entry is: • Bad Debts Expense is increased by a debit • Accounts receivable is decrease by a credit Under the direct write-off method, Bad Debts Expense will show only actual losses from uncollectible Accounts receivable will be reported at its gross amount Although this method is simple, its use can reduce the usefulness of both the income statement and balance sheet Moreover, Bad Debts Expense is often recorded in a period different from the period in which the revenue was recorded No attempt is made to match bad debt expense to sale revenues in the income statement Nor does the direct write-off method show accounts receivable in the balance sheet at the amount actually expected to be receivable Consequently, unless bad debts losses are insignificant, the direct write-off method is not acceptable for financial reporting purposes 2.2.2.2 Allowance method for Uncollectible Accounts: (Phương pháp dự phòng nợ khó đòi) The allowance method of accounting for bad debts involves estimating uncollectible accounts at the end of each period This provides better matching on the income statement and ensures that receivables are stated at their cash (net) realizable value on the balance sheet Cash (net) realizable value is the net amount expected to be receivable in cash It excludes amounts that the company estimates it will not collect Receivables are therefore reduced by estimated uncollectible receivable in the balance sheet through use of this method The allowance method is required for financial reporting purposes when bad debts are material in amount It has three essential features: • Uncollectible accounts receivables are estimated This estimate is treated as an expense and is matched against sales in the same accounting period in which the sales occurred Page of 54 • Estimated uncollectibles are debit Bad Debts expense and are credited to Allowance for Doubtful Account (a contra asset account) through an adjusting entry at the end of each period • When a specific account is written off, actual uncollectible are debited to Allowance for Doubtful Accounts and credited to Accounts Receivable 2.2.2.2.1 Recording estimated uncollectible: To illustrate the allowance method, assume that AAA Pharma has credit sales of 120 million VND in 2002 Of this amount, 20 millions VND remains uncollected at Dec 31 The credit manager estimates that 12 million VND of these sales will be uncollected The adjusting entry to record the estimates uncollectible is: • Bad debts expense is increased by 12 millions debits • Allowance for Doubtful Accounts is increased by 12 millions credits Bad debts expense is reported in the income statement as an operating expense Thus, the estimated uncollectible are matched with sales in 2002 The expense is recorded in the same year the sales are made Allowance for Doubtful Accounts shows the estimated amount of claims on customers that are expected to become uncollectible in the future This contra account is used instead of direct credit to Account Receivable because we not know which customers will not pay The credit balance in the allowance account will absorb the specific write-off when they occur It is deducted from accounts receivable in the current assets section of the balance sheet Allowance for Doubtful is closed at the end of the fiscal year 2.2.2.2.2 Recording the write-off an uncollectible account: Companies use various methods of collecting past-due accounts, such as letters, calls, and legal action When all means of colleting a past-due account have been exhausted and collection appears impossible, the account should be written off To illustrate a receivable write-off, assume that CFO of AAA Pharma authorizes a write-off of the millions VND balance owed by Tien Viet Company on March 1, 2003 The entry to record the write-off of is Page of 54 • Allowance for Doubtful Account is decreased by million debits • Account receivable is decrease by million credits Bad debts expense is not increased when the write-off occurs Under allowance method, every bad debt write-off is debited to the allowance account rather than to Bad debts expense A debit to Bad debts expense would be incorrect because the expense has already been recognized when the adjusting entry was made for estimated bad debts Instead, the entry to record the write-off of an uncollectible account reduces both Account Receivable and the Allowance for Doubtful Accounts A write-off affects only balance sheet accounts The write-off the account reduces both Accounts Receivable and Allowance for Doubtful Accounts Cash realizable value in the balance sheet, therefore, remains the same 2.2.2.2.3 Recovery of an uncollectible account: Occasionally, a company collects from a customer after the account has been written off Two entries are required to record the recovery of a bad debt: (1) the entry made in writing off the account is reversed to reinstate the customer’s account (2) The collection is journalized in the usual manner Recovery of a bad debt, like the write-off of a bad debt, affects only balance sheet accounts The net effect of the two entries is debit to Cash and a credit to Allowance for Doubtful Receivable is debited and the Allowance for Doubtful is credited in entry (1) for two reasons: First, the company made an error in judgment when it wrote off the account receivable Second, after customers did pay, Account receivable in the general ledger and customer’s accounting the subsidiary ledger should show the collection for possible future credit purposes 2.2.2.2.4 Bases used for allowance method: Company must estimate the amount of the expected uncollectible if they use the allowance method Two bases are used to determine this amount: (1) percentage of sales, and (2) percentage of receivables Both bases are generally accepted The choice is a management decision It depends on the relative emphasis that management wishes to give to expenses and revenues on the one hand or to cash Page of 54 realizable value of the accounts receivable on the other The choice is whether to emphasize income statement or balance sheet relationships Figure 1: Percentage of sales In the percentage of sales basis, manager estimates what percentage of credit sales will be uncollectible This percentage is based on past experience and anticipated credit policy The percentage is applied to either total credit sales or net credit sales of the current year For example, AAA Pharma estimated percentage of net credit sales will become uncollectible If net credit sales for 2002 are 800 million, the estimated bad debts expense is million (1% * 800 million) This basis of estimating uncollectible emphasizes the matching of expenses with revenues As a result, Bad Debts Expense will show a direct percentage relationship to the sales base on which it is computed When the adjusting entry is made, the existing balance in Allowance for Doubtful Account is disregarded The adjusted balance in this account should be a reasonable approximation of the uncollectible receivable If actual write-off differs significantly from the amount estimated, the percentage for future years should be modified Page of 54 Figure 2: Percentage of receivables Under the percentage of receivable basis, manager estimates what percentage of receivable will result in losses from uncollectible accounts An aging schedule is prepared, in which customer balances are classified by the length of time they have been unpaid Because of its emphasis on time, the analysis is often called aging the account receivable After the accounts are aged, the expected bad debt losses are determined This is done by applying percentages based on past experience to the totals in each category The longer a receivable is past due, the less likely it is to be collected So, the estimated percentage of uncollectible debts increases as the number of days past due increase An aging schedule for AAA Pharma is shown: Page 10 of 54 Enchanteur 7,4 7,3 6,9 8,6 X-Men 6,3 5,6 6,7 5,7 Double Rich 3,8 4,3 4,9 4,7 Lifebuoy 1,6 2,1 4,5 4,6 Romano 4,0 3,5 3,7 3,2 Pigeon 3,0 3,7 3,3 NA Palmolive 4,3 2,9 3,2 3,1 Table 6: Market share in Shower Gel The receivable policy in Trade Systems is similar to Supermarket, except they have credit line based on their area and sales strategy of company and discount on 5% pretax price To trade Sales, they have specific for each type: Retailer Limit No discount days from invoice date Cash on delivery Sales men Credit line Discount Payment term Payment method Collectors 4.2.2 Market Limit on 2% pretax price days from invoice date Cash on delivery Sales men Estimate how these receivable policies affect on cash flow: Items that affect Cash flow from Accounts Receivables: • Competition • Written corporate policy that include: - Terms of sales - Collection techniques incorporated - Support by upper management of its credit department versus sales department • Corporate customer philosophy referring to how a customer is treated • Size and kill/experience level of the individuals in the credit and collections areas Page 40 of 54 • Lack of computer systems that are conducive to improving cash flow efforts • Sales support of cash flow as well as cooperation with the credit area and their integrity plus incentive to cooperate • Actual top management support of cash flow, not just a written policy and procedures manual Receivable Turnover ratio: Net Sales Average receivable Receivable turnover 2005 82.946.213.00 5.662.719.98 2006 107.137.184.13 8.912.647.72 2007 135.344.029.28 17.968.700.85 14,64776877 12,02080318 7,532210057 Table 7: Receivable turnover in 2005, 2006, and 2007 As you know that, the payment term is 45 days for Metro, 15 days for Supermarkets and wholesalers, and day for retailer In their distribution, Supermarket and wholesalers are accounted for 58% volume sold; Metro is accounted for 14% and Retailers for 28% Receivable turnover in 2005, 14.6 times is less than payment term for Metro, Supermarket and wholesalers This receivable turnover decreased (14.6-12.02) nearly times in 2006, and (14.6-7.53) times in 2007 Day Sale Outstanding: Account receivable Average daily sales DSO 2005 7.124.871.41 227.249.89 31,35258347 2006 10.700.424.03 293.526.53 36,45470808 2007 25.236.977.67 370.805.56 68,05986863 Table 8: DSO in 2005, 2006, and 2007 You see that DSO is increasing from 2005 to 2007 DSO in 2007 is double DSO in 2005 It means that many invoices were past due From this point, we may think that receivable management is not good Page 41 of 54 Now we turn to see Bad debt at 12/31/2006 and at 12/31/2007(see full table xx in Appendix) 2005 53.671.54 7.124.871.41 0,75% Bad debts Account receivable % Bad debt 2006 11.196.85 10.700.424.03 0,10% Table 9: Percentage bad debts of Account Receivable 2005 53.671.54 82.946.213.00 0,06% Bad debts Net Sales % Bad debt 2006 11.196.85 107.137.184.13 0,01% Table 10: Percentage bad debts of Net Sales 2004 14.678.53 Bad debts 2005 53.671.54 2006 11.196.85 2007 Table 11: Bad debt in 2004, 2005, 2006, and 2007 based on invoice day Bad debts percentage of Account Receivable and Net Sales was decreasing And these bad debts are in accepted limit 4.2.3 Evaluate each receivable policy: a How are order taken? (Receivable Antecedents) To Metro, Supermarket, and wholesales they receive order via fax To retailers, they receive form sales men In 2005 and 2006, they had taken an order for days, 3-4 days if so far They use Rhub to make a tax invoice Rhub is software used to manage good inventory, make an invoice based on what information you had input already: price, tax rate, discount, customer’s address, payment term… b Credit processing: From Credit application to credit –Approved Customers, they take days to 15 days making decision The CD Sup receives Credit Page 42 of 54 application, assesses Credit application, then make a proposal to Sales Director Sales Director review and assess this proposal, then discuss to CFO and Marketing Director to giving Credit line if approved It has been approved by Sales Director, CFO and Marketing Director c Credit decision: The main Credit decision makes on Credit line It is calculated by a special formula of CD Sup including target sales, market share at this area To wholesaler, after calculating, they assign target sales to customers within weeks, and then they divide by It is an amount the customers have to take a deposit with the company or letter of credit from banks The triple of the amount is credit limit that is the largest of volume customers can make an order d Collection efforts The system provides a list of customers that are past due as of day; call a past due notice to them, followed by form letters, followed by a call and more form letter; end by either collecting or placing for collection Page 43 of 54 CHAPTER DISCUSSION i If it was easy, everyone would it (well): Management of the receivables asset is a demanding task The vast majority of companies expect that over 99.9% of all billings will be collected Collecting ninety five percent of revenue is not good enough Companies will tolerate bad debt expense of several tenths of a percent of revenue, but not much more Which other departments are expected to perform at 99 plus percent effectiveness? It is generally expected that a high percentage of invoices will be paid on time and over 90% within 15 days of the due date Management expects that the asset will be managed to promote sales and that all customers will be served promptly, courteously, and professionally Astoundingly, most firms also expect this all to be accomplished for a cost equal to about two to three tenths of a percent of revenue Quite a bargain! Management of the receivables asset is a complex task It addresses the ramifications of practices and processes usually outside the span of control of the responsible manager It requires balancing of opposing priorities It is affected by the state of the domestic and global economy, interest rates, foreign exchange rates, banking regulations and practices, business law, and other factors Excellence in receivables management is a combination of art as well as science; it involves business process, technology tools, staff skills, motivation, company culture, changing behavior of customers and coworkers, the right organization structure and metrics, incentives, and flexibility to deal with changing external influences ii Influences outside the control of the responsible manager: The receivables asset is sometimes called the garbage can of the company This is because the receivables asset reflects the quality of the entire revenue cycle operation If an error is made in taking an order, fulfilling it, invoicing it, applying the customer payment, or if the customer is dissatisfied with the product or service, it will manifest itself as a past due or short payment in the receivables ledger The quality of Page 44 of 54 the receivables asset is an excellent barometer of customer service It is feedback the customer willingly and quickly gives It is tempting to call it a free quality control measurement system, except it is not free The firm does not have to pay customers for the feedback, but it does incur costs in remediating the problems iii Conflicting priorities: Excellence in receivables management requires trade-offs between conflicting goals The trade-offs are best balanced in accordance with the company’s overriding strategic objectives To optimize the trade-off, the relative ranking of these strategic objectives must be understood: • Sales growth • Profitability • Cash generation • Market share • Risk tolerance The conflicting objectives are to: • Loosen credit acceptance criteria and controls to boost sales versus tightening credit controls to minimize the investment in receivables and the exposure to bad debt loss Page 45 of 54 • Achieve strong receivables management results and provide excellent financial service to your customers versus minimizing the cost of the function iv Credit policy: The global marketplace runs on credit Goods and services are routinely delivered with the expectation that payment will be made according to the agreed payment terms Credit risk has two dimensions The first is the risk that payment will never be made This loss is known as bad debt The second risk is that payment will be made late; that is, beyond agreed payment terms This loss is known as delinquency It is considered a loss on the basis that a company will have to borrow money and pay interest to replace the funds not received on time Naturally, bad debt loss is the more devastating of the two losses and the risk that receives the most management attention The critical task to managing credit risk is to balance the need for credit sales, and the profit earned on those sales, against the perceived risk of extending credit to a customer There is no easy answer or magic formula for balancing these factors The proper balance varies by individual company and is based on a firm’s profit margins, strategic goals, and whether a product can be repossessed and resold There are many techniques and tools to investigate, evaluate, and monitor credit risk; however, balancing that risk against the other company priorities is unique to each firm, requires judgment, and is never easy v Bookkeeping for Accounts Receivable: Companies have two methods available to them for measuring the net value of account receivables, which is computed by subtracting the balance of an allowance account from the accounts receivable account The first method is the allowance method, which establishes a contra asset account as the offset to accounts receivable in the balance sheet The amount of the allowance can be computed in two ways; through the analysis based on sales method and analysis based on accounts receivable method The reason a contra asset receivable account is necessary is to adhere to the matching principle of accounting, which mandates that accrual basis companies match all revenues and expenses with the period in which they are earned and incurred, respectively The second method, the direct write off method, is Page 46 of 54 simpler than the allowance method in that allows for one simple entry to reduce accounts receivable to its net realizable value For tax reporting purposes, the direct write-off method must be used; however, for financial reporting purposes, it is necessary to use the allowance method because it matches a period's revenue with associated expenses-a fundamental concept of accounting known as the matching principle vi Organization structure: The “right” organizational structure is one that will: • Deploy the proper skills to each of the functions within receivables management to maximize effectiveness • Staff the positions with the appropriate level of knowledge and experience to be cost efficient Page 47 of 54 CHAPTER CONCLUSION AND RECOMMENDATION Internal control in receivable management: The principle of the internal control can be used to establish controls to safeguard receivables For example, the four functions of credit approval, sales, accounting, and collections should be separated The individual responsible for sales should be separate from the individuals accounting for the receivables and approving credit By doing so, the accounting and credit approval functions serve as independent checks on sales The employee who handles the accounting for receivable should not be involved with collecting receivables Separating these functions reduces the possibility of errors and misuse of funds Bookkeeping for Accounts Receivable: AAA Pharma still uses direct write-off method for uncollectible Accounts Although this method is simple, its use can reduce the usefulness of both the income statement and balance sheet, as we mention above So now is the time to change into Allowance method and analysis based on receivable method Monthly estimates of credit losses: At the end of each month, management should again estimate the probable amount of uncollectible accounts and adjust the Allowance for Doubtful to this new estimate Based on past experience, the uncollectible accounts expense is estimated at percentage of receivable by Rhub Page 48 of 54 software The computer software is quickly and easily prepares monthly aging schedules of account receivable With this method, it is useful to management in review the status of individual accounts receivable and in evaluating the overall effectiveness of credit and collection policies The longer an account is past due, the greater the likelihood that it will not be collected in full Base on past experience, the credit manager estimates the percentage of credit losses likely to occur in each the age group of account receivable This percentage, when applied to the total amount in the age group, gives the estimated uncollectible portion for that group By adding together the estimated uncollectible portions for all age groups, the required balance in Allowance for Doubtful Accounts is determined (see in table 1) It is related to taw government; the company has prepared for at least years to change in this method Page 49 of 54 REFERENCE Johnson & Johnson homepage at http://www.jnj.com/connect/ John G Salek,(2004) Wiley Best Practices, Accounts Receivable Management Best Practices Weygrandt, Kieso, Kimmel.(2003), John Wiley & Sons, Financial Accounting Warren Reeve Fess, (2005), Thomason 21e, Accounting Williams Haka Bettner Carcello, (2008), Mc Graw-Hill, Financial Accounting Michelle Dunn , (2006), Entrepreneur Magazine’s, Credit and Collections handbook Pay Attention to Internal Collections- Darin Ball, January 16 2008 www.collectionadvisor.com Seven Habits - and Rewards - of Highly Efficient Collections Operations Lois Brown, January 17 2008 Optimizing Receivables - Yu-Soon Koh, January 28 2008 Source: CreditandCollectionsWorld.com 10 Best Practice in Consumer Collections - Astrid Rial, January 21 2008 Page 50 of 54 APPENDICES Table 11: Bad debts at12/31/2006 Page 51 of 54 Table 12: Bad debts at12/31/2007 Figure 8: Chart of accounting department Figure 9: Managing distribution network Page 52 of 54 Page 53 of 54 Page 54 of 54 [...]... Based on Vietnam law, distributors of medical products, like Johnson & Johnson health care product, have to pharmaceutical companies So from July 2004, AAA trading company limited changed their name to AAA Pharmaceutical Company limited with their new logo: Tax code: 030.1000.691 Email: aaa@pharma.com AAA Pharma was founded with VND 1.2 Billion charter capital in 1997 As Dec 2005, AAA charter capital... countryside and they are not familiar with shopping in Page 34 of 54 supermarket So AAA Pharma considers General Trade as main channel for a long time - Modern Trade channel: is a channel that AAA Pharma uses to distribute their goods to whole national supermarkets and bookshops such as Metro, Big C, Co-op Mark, Maximax, Citimax, Vinatex This is a potential channel because sale volume of each supermarket... Billion Page 28 of 54 AAA Pharma Headquarter in Ho Chi Minh City plays the key function in operating all the main activities And this is also the center of training and upgrading the staff quality for all of our nationwide branches They have the most extensive infrastructure network in Vietnam with branches in Hanoi, Da Nang, Can Tho, Nha Trang, Hai Phong, Dong Nai, Nghe An and representative office... Evaluate the liquidity of receivables Page 14 of 54 iv Account receivable management: Figure 4: Receivable management process 2.4.1 Receivables Antecedents: Receivables antecedents are defined as all the up-front operations required creating a receivable The antecedents are absolutely critical to the management of the receivables asset They directly impact the quality and collectability of the asset and... asset and accelerating cash inflow (increasing asset turnover) If you view this asset as a vault of cash, think of the precautions a bank takes to protect its cash reserves However, receivables are much more fluid and Page 21 of 54 an integral part of doing business, so the safeguarding and acceleration of turnover must be accomplished: • At low cost • Without strangling sales volume • Without alienating... begins when all of the antecedent functions are completed and a receivable is posted to the detailed accounts receivable ledger (a comprehensive list of all amounts owed the company) The receivables begin aging immediately, increasing the cost of financing them and increasing the risk of nonpayment Management of this asset (which is one of the largest assets of the company) involves safeguarding the asset. .. profit for the business - Using both financial accounting and estimated data to aid management in running day-to-day operations and in planning future operations - Gathering and reporting all information that is relevant and timely to the decision-making needs of management, and other involved appropriate authorities - Implementing financial banking system, monitoring tax payment - Supporting to make... development of workforce through a combination of classroom learning and online training that offers high quality course curriculum that facilitates continuous learning These training resources for our valued employees are designed to enhance the mastery of vital competencies for career development There were a few of staffs that operated separately at first, now AAA Pharma is proud of younger staffs that are... but they just are accounted for 17% of sale volume because of entrance in Vietnam 2 Distribution network: AAA Pharma distributes goods thorough 2 channels: - General Trade channel: is a channel that AAA Pharma uses to distribute their goods to whole national retailer: shops, outlets, retailers, pharmacy… This is main channel, and accounted for 76% whole distributed goods Because 7075% Vietnamese lives... Factoring arrangements vary widely Typically the factor charges a commission to the company that is selling the receivables This fee ranges from 1-3 percent of the amount of receivable purchased Figure 3: Sales of receivable to factor iii The statement presentation and analysis of receivable: 2.3.1 Receivables on the balance sheet: All receivable that are expected to be realized in cash within a year