Chapter 3: SOME SOLUTIONS TO IMPROVE EFFICIENCY OF WORKING
3.2. Some solutions to improve working capital management at ANSV company
3.2.3 Improving the efficiency of receivables management
In the past 3 years, short-term receivables of the Company have decreased in value.
Accounts receivable from customers decreased the most in total receivables, which made the Company reduce the capital appropriation and well perform receivables collection.
However, account receivables are still high, in order to further manage receivables, the Company needs to apply some of the following measures:
Develop appropriate commercial credit policies: According to this solution, the Company needs to assess and assess the impact of selling on credit to increase revenue and profit together with possible risks to identify a resale policy in accordance with the specific conditions of the Company to both ensure customer attraction, consume more products; ensuring fast recovery of arising and restricted debts which are stagnant. In this way, the company must provide specific incentives for the cases:
+ If the customer pays nows for the item, the business may have a reasonable discount that encourages the payment when purchasing the customer.
For example, a company may apply a discounted or progressive discount policy based on the total value of purchased goods. And depending on the situation or specific time in the company, the company has appropriate discount policies.
+ The company may also offer penalty interest rates for deferred payment of goods, currently most businesses are applying the fixed penalty interest rate of 150% of bank penalties and thus customers will be responsible more responsible for payment on time.
At the same time, the company must also regularly monitor and control the receivables of large groups of customers, which customers are often overdue so that they can give directions and specific measures in receivables recovery.
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Applying the process of building a selling on credit process is as follows:
Analyze creditworthiness of customers' credit: In order to avoid losses due to irrecoverable debts, the company needs to pay attention to analyzing the reputation of customers before deciding whether to sell them or not. is not? The process of reputation evaluation of customers goes through 3 steps:
(1) Collect information about customers: indicators showing financial capacity of customers such as solvency, ratio of payables in total short-term debts, revenue, profits; information on repayment term on time, overdue; Debt sales, businesses can also assess customer credit according to 5 criteria applicable to customers of commercial banks such as capacity, capital, mortgage or guarantee, overall economic conditions and environment affects the ability of customers to do business, customers' reputation.
(2) Analyze the information collected to judge customers' reputation.
(3) Decide whether to sell on credit or not?
Combined with the assessment of customer reputation: compare the benefits between increasing revenue and profit if agreeing to sell with increasing the cost of managing debt receivables and the possibility of failing to recover capital to make decisions plan to sell on credit.
- Apply appropriate measures of receivable:
For receivables that are undue and due: The company needs to open a monitoring book, details to each customer, debt term, debt amount and debt ratio.
ANSV company should take the initiative to contact customers early so that they can be notified of the quickest debt reconciliation, instead of waiting until the invoice expires. When the payment is due, there should be measures to urge customers to pay the debt: to notify the due debt to customers, prepare payment contracts, papers and vouchers.
+ For overdue debts: when sending an email or notifying that the customer has not paid the debt, it is necessary to send a reminder letter for the second time or 3 times with specific timelines for older debtors over time allowed. At the same time, the Company should coordinate with customers to find out the reason why
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customers are late in payment, require customers to prove their ability to repay debts with future income, with assets, with cash flow and satisfy upon the time of the next repayment. Depending on the level and relationship between the customer and the company, the following measures shall be applied: debt rescheduling, debt rescheduling, handling of collateral assets (if any), debt reduction, resale of debts or requests for intervention. legal card if the customer owes debt or is unable to pay the debt.
With the situation of receivables of ANSV, there were a number of agents and customers falling into the situation of long-term bad debts, slow payment ability and partly due to the professional qualifications of the debt accountants. restricting the ability to closely monitor customer receivables. Therefore, the Company needs to take measures to monitor debts in details to avoid the increase of bad debts in the long term. In particular, the Company should set up a detailed and comprehensive report to monitor the debt of customers such as :
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Table 3.2. ANSV debt monitoring table for age customers
Name Address Pay term
(days)
Contrac t number
Invoice
date Due date
Balance (VND billion)
Undue (days)
Overdue 1-30
days 31-60
days 61- 90 days
>91 days
1.
VNPT Ho Chi Minh
124, Hai Ba Trung
District, HCM City 30 01 01/01/2016 31/01/2016 50 50
2.VNP T Ha Noi
75 Dinh Tien Hoang street,Hoan Kiem District, Ha Noi
45 02 30/10/2017 14/12/2017 100
100
3.VNP T NET
7 Pham Hung Street, Nam
Tu Liem street 60 03 01/12/2017 01/02/2018/
2017 100
100
4.Mobi fone
Lot, Yen Hoa, Cau Giay
Street, HN 55 04 15/09/2017 05/11/2017 20
20
…. …… 40 05 05/11/2017 15/12/2017 50 50
Total 320 100 150 20 - 50
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Use of receivable management software: The company should invest in accounting software with administrative parts (modules) to support receivable management such as eCatstock, Sales & Inventory Controls or GCOM.
Currently, these application software can produce general reports, also report the debt to customers according to the management criteria, help save time, improve the work efficiency of the receivable accountant.