Project on Receivables Mgmt

INTRODUCTION:

UNIFLEX CABLES LIMITED appointed interns to study the receivables position of their company. I was asked to analyze the data of the past six months starting from October’08 to March’09. I had to analyze the debtors’ payment pattern for that period and find out the reasons why there was a delay in receiving payments from the debtors’.

OBJECTIVE OF THE STUDY:

Compare Actual Date of Receipt from customers with the Payment Due Date.

Find out the number of days delay in receiving the payment.

Compute the interest cost @12% for the number of days delayed.

Find out the reason for delay in case of each invoice.

Analyze the reasons.

Find out the impact of each reason.

Provide Recommendations and Suggestions.

NEED OF THE PROJECT:

In the current market situation handling the receivables is very important. The need for this research was to understand how much interest cost was lost due to delay in payment by the customers. This analysis helped the company understand its receivables collection rate. It also helped them in setting a proper procedure for future keeping this analysis as base.

SCOPE OF THE PROJECT:

UNIFLEX CABLES LIMITED intends to improve the receivables management situation of its company. The scope of the project is to find the loop holes in the collection procedure. They also intend to improve their credit control activities

RESEARCH METHODOLOGY:

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We were asked to make an in depth analysis of each and every process starting from the initial stages of enquiry done by the customers to the final receipt of payment from the customers. The data was bifurcated month wise. For the convenience of analysis the data was further bifurcated on the basis of groups of managers. A detail study was done for all customers invoice wise.

The following points related to each customer were looked upon:

The payments terms with each customer.

The delivery schedule accepted for each order.

The invoice date of each customer

The lorry receipt of each delivery

When was the receipted challan received from the transporter?

An exact due date for each invoice with respect to the payment terms was found out.

The date on which the actual payment was received.

Was it according to the decided terms?

If there was a delay then for how many days?

The reason for such delay was found out.

An interest of 12% was charged for the period of delay.

LIMITATIONS OF THE PROJECT:

The study is conducted purely on the data made available as per the financial

statements of the company and interferences were drawn on theoretical conventions.

The period of study was short.

COMPANY PROFILE:

2

UNIFLEX CABLES LIMITED is a leading company in India manufacturing and supplying wide range of cables by brand name of UNICAB. The manufacturing plants are located at Umbergaon, Gujarat and Silvassa.

UNIFLEX CABLES LIMITED manufactures cables as per various National, International and Customers Standards and specializes in producing cables for critical applications. These cables are designed after detailed engineering to meet the specific requirement and high service performance. All the divisions have their independent testing equipments. The quality assurance system at each division ensures the quality of product at every stage right from raw material up to finished product. The company has been accredited since 1996 with ISO: 9001-2000 certification from NVT-KEMA.

COMPANY HISTORY:

UNIFLEX CABLES LIMITED has been improving itself at each stage of its existence. The following points show its development over the years

1981: ESTABLISHED WITH ELASTOMERIC DIVISION 1990: INCORPORATED AS UNIFLEX CABLES LTD 1993: POWER CABLE DIVISION 1995: OPTICAL FIBER CABLE DIVISION 1996: JELLY FILLED (PIJF) CABLE DIVISION 1996: ISO 9002 CERTIFIED 1999: ISO 9001 CERTIFIED 2003: EXPORT HOUSE

COMPANY MISSION:

UNIFLEX CABLES LIMITED strives to strengthen India's industrial base through the effective utilization of staff and materials. The means envisaged to achieve this are high technology and productivity, consistent with modern management practices.

UNIFLEX CABLES LIMITED recognizes that while honesty and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values.

COMPANY’S QUALITY POLICY:We Strive to Deliver, More than we Promise

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QUALITY MISSION:“To be the leading supplier of high quality cable products and systems worldwide”

RECENT CHANGES IN THE COMPANY PROFILE:

UNIFLEX CABLES LIMITED has been taken over by APAR INDUSTRIES LIMITED. There has been a change in the management of the firm.

APAR INDUSTRIES LIMITED (AIL) a listed (BSE & NSE), profit making and consistent dividend paying Company, acquired substantial equity shares with voting rights of the Company from Baid family members, the then promoter group of the Company resulting in change in control and management of the Company.

AIL now holds 65.47% of the paid up Equity Share Capital of the Company and has:

a) Become the Promoter of the Companyb) Acquired Control and Management of the Company andc) The Company has become subsidiary of AIL.

UNIFLEX CABLES LIMITED has been hugely benefited by this takeover. Due to the involvement of AIL the working capital position of the company has improved. The company is now able to get easy funds from the bank. There has been huge investment made on the manufacturing unit of the company to improve its production capacity. UNIFLEX CABLES LIMITED has taken various measures to sustain in this competitive market. Changes were made to reduce the fixed cost incurred by the company. New managers were brought in to change the outlook of the company.

FUTURE OUTLOOK OF THE COMPANY:The medium and long term future outlook for the cable industry seems to be bright as

the demand for the Power Generation & its distribution enjoys top priority of the Government.

India’s need of the hour is to build Power Generation capacity and over Rs.1,00,000 Crore is likely to be invested for generation and transmission of Power by 2012 during eleventh five year plan which will create demand for power cables.

The telecom sector is also expecting some growth and with next phase of expansion, seen in broadband communication whereby Optical Fiber Cable will also have a better demand.

With change in control and management, your company expects to achieve higher sales and better performance in the years to come.

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PRODUCT RANGE

ELECTRICAL CABLES

TELECOMMUNICATION CABLES

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COMPOSITION AND CATEGORY OF DIRECTORS

Category Name of Director

Chairman and Managing directors Shri Bijay Singh Baid

Executive DirectorsShri Jay Kumar Baid

Shri Ajay Kumar BaidShri Sanjay Kumar Baid

Independent Directors

Shri Raghunath Rai KumarShri B.L. Gupta

Shri Suresh Nevatia

Non-Executive DirectorsDr.Narendra D. DesaiShri Kushal N.Desai

Shri Chaitanya N.Desai

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SALES ORGANISATIONAL STRUCTURE OF THE COMPANY

UNIFLEX CABLES LIMITED has efficiently divided its sales force into different groups. This bifurcation is on the basis of the products handled by them. Each group has a head and various managers working under them to help them in handling the customer base. Following are the different groups of sales managers working in UNIFLEX CABLES LIMITED:

Group A

Mr. Walimbe

Mr. Lad

Mr. Om Parwal

Mr. Kanesan

Mr. Jitendra Podar

Mr. Praveen Patel

Group C Group D Group E Group F

Mr. Dandekar Works Mr. Murali Nambiar Export

BENEFITS GIVEN BY THE COMPANY

The company was very helpful in terms of providing access to various details of the

company accounts.

I was given access to the Tally software of the company.

I was also allowed to read the files of various customers.

I had access to the purchase order of all the customers.

I had a one on one interaction with the sales managers who helped me understand the

process involved.

Group B

Mr. Suresh

Mr. Suresh (Defense)

Mr. Suresh (Local)

Mr. Ekambaram

Mr. Ramachandran

Mr. Subhash

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SWOT ANALYSIS OF THE COMPANY

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RECEIVABLES MANAGEMENT

A Receivable is the money owed to a company by a consumer for products and services purchased on credit. This is usually treated as a current asset of accounts receivable after the customer is sent an invoice. Accounts receivable are known by various names, such as accounts receivable aging, days receivable, accounts receivable turnover and invoice factoring.

Accounts receivable are reported on the balance sheet of the seller at net realizable value, which is the net amount the seller expects to collect.

According to the experts, receivable or invoice factoring is one of a series of accounting transactions. These accounting transactions deal with the billing of customers who owe money to a person, company or organization for goods and services purchased.

With businesses looking for improved bottom line performance, better receivables management, collections is a key focus area along with timely and accurate billing for organizations across industries.

It can be argued that revenue generation is the most critical function of a company. Every company expends substantial resources to generate increasing levels of revenue. However the revenue must be converted into cash. Cash is the lifeblood of any company. Every rupee of a company’s revenue becomes a receivable that must be managed and collected in time. Therefore the staff and processes that manage your receivables are asset to a company.

Benefits of effectively managing the Receivables are:

Increased Cash Flow

Higher Credit Sales and Margin

Reduced Bad Debts Loss

Lower Administrative cost in the entire revenue cycle

Decreased deduction and concession losses

Reduced Interest Loss

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CREDIT POLICY

When a sale takes place they are generally on credit basis i.e. the customer is given certain period of time to pay back the seller. Each company has its own way of providing credit to its customers. This is called as the CREDIT POLICY of the company. The credit terms of the company should be according to the competitive market situation otherwise the loss of customers could prove costly to the company.

Components of Credit Policy: Development of credit standards

Credit Terms including credit period allowed and cash discount

Credit Limit allowed to customers

Collection Procedure

how long to wait past due date to initiate collection efforts

methods of contact

whether and at what point to refer account to collection agency

Determinants of credit period: Market competition

The financial power of the buyer

Customer type (i.e. wholesaler, retailer or final consumer)

Credit Risk

Consumer Demand

Cost, Profitability and Standardization.

COMPANY’S RECEIVABLES MANGEMENT POLICY:

UNIFLEX CABLES LTD has an organized plan to monitor its receivables and manage them on a monthly basis. As mentioned before it has divided its sales team in to different groups. UNIFLEX CABLES LTD prepares an MIS Report on monthly basis analyzing the outstanding of each group and in that each manager. They prepare a collection plan for each manager on a monthly basis. Once the month ends the manager has to fill the actual statistics of collection done by him. Now an easy comparison is possible with the planned figures and the actual collection figures.

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DEFINING THE RESEARCH PROBLEM:

UNIFLEX CABLES LIMITED manufactures cables and supplies globally. Due to the current market situation UNIFLEX CABLES LIMITED has been facing problem in collecting its receivables on time. This in turn was affecting the working capital position of the company. This also affects their capability in paying back the suppliers on time. As discussed earlier recovering the Debtors in time is crucial for a company’s Liquidity position.

EFFECTS OF IMPROPER RECEIVABLES MANAGEMENT

The following mentioned below are the ill effects of not properly managing the receivables of the company:

If the money from the debtors don’t come on time the operating cycle of the company will be affected

The company will not be able to pay back its Creditors on time.

In case of shortage of money the company would be forced to take bank loan.

This would in turn increase the fixed cost incurred by the company in the form of bank interest.

Each company has some monetary obligations on a monthly basis. If the collections due for that particular month are not received then the company would become incapable of fulfilling those monetary obligations and statutory payments.

Some of the statutory payments are sales tax, custom and excise duties payments. Some of the monetary obligations are office rent, factory rent, salaries to employees etc.

DATA COLLECTION METHOD:

Secondary data collection method was opted for this research project.

Purchase order files of each customer were studied to understand the payment terms that was agreed upon.

Records related to transportation i.e. the lorry receipt and the receipted challan from the transported was also verified.

Tally was viewed to find out when the customer actually made the payment.

Later on a face to face interaction with all the managers was done to find the reasons for delay in receiving the money from the customers.

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SALES ANALYSIS – by Segment - MONTH WISE

SALES ANALYSIS

OCT NOV DEC JAN FEB MAR

GOVT 40,700,031.41 64,058,038.55 57,669,710.95 61,977,111.00 51,910,679.00 57,019,524.40

% 25.89% 39.16% 40.10% 52.41% 44.50% 42.94%

NG 39,174,873.33 38,710,095.10 31,725,054.40 42,939,670.98 23,159,699.12 42,074,589.84

% 24.92% 23.67% 22.06% 36.31% 19.85% 31.68%

EXPORT 77,355,437.84 60,791,281.89 54,432,944.13 13,328,100.41 41,584,006.85 17,906,532.96

% 49.20% 37.17% 37.85% 11.27% 35.65% 13.48%

TOTAL 157,230,342.58 163,559,415.54 143,827,709.48 118,244,882.39 116,654,384.97 117,000,647.20

* Figures of different segments are in Rupees

The table above represents the entire Sales of the company over the period of October’08 to March’09. The sales figures have been bifurcated in to Government, Non Government and Export clients. The contribution of each customer has been calculated in terms of percentage to the total sales.

When the sales of the six months are compared it is found that the highest sales has taken place in the month of November’08 with Rs.163,559,415.54

Further the data has been graphically represented below with a bar diagram.

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.

Observations: In the month of October’08 we have majority of Export Sales with 49.20% followed by

Government organizations are next with 25.89%, however Non Government is slightly less with 24.92%.

In the month of November’08, Government Segment comes to the top with 39.16% sales. Export Sales stand second with 37.17% again sending Non-Government in the third position with 23.67%.

In the month of December’08 the major sale has been contributed by Government organizations with 40.10%. The same has been repeated in the month of January’09 with Government segment toppings the sales with 52.41%.

In the month of February’09 the sale of Non-Government segment drastically reduced to 19.85%, where as Government segment stayed on top with 44.50% sales.

In the month of March’09 Non-Government sector recovered by increasing it sales to 31.68%. Government Segment had a sales of 42.94%

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Sales v/s Collection AnalysisFor the month - OCTOBER

Invoice AmountAmt Rcvd on

TimeAmt Rcvd Post Due

DatePending Amt

157,230,342.58 39,806,017.14 101,243,557.78 18,184,295.94 100% 25.32% 64.39% 11.57%

The table represents of the entire sales in the month of October ’08 how much was collected on time and how much was collected post due date, finally leaving the pending amount yet to be received. The data has also been graphically represented with a pie chart.

It is observed that out of the entire sales around 25.32% was collected on time where as 64.39% was collected post due date leaving with 11.57% still pending.

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Sales v/s Collection AnalysisFor the month - OCTOBER – by segment

All the debtors have been segregated into Government organizations, Non Government Organizations and Export clients. Accordingly their respective collection details are mentioned.

OCT Invoice AmtAmt Rcvd on

TimeAmt Rcvd Post

Due DatePending Amt

GOVT 40,700,031.41 3,448,944.00 30,740,450.95 7,075,050.05

% on Sales 100% 8.47% 75.53% 17.38%

NG 39,174,873.33 4,850,687.49 28,554,100.48 5,765,218.40

% on Sales 100% 12.38% 72.89% 14.72%

EXPORT 77,355,437.84 31,506,385.65 41,949,006.35 5,344,027.49

% on Sales 100% 40.73% 54.23% 6.91%

OCT TOTAL 157,230,342.58 39,806,017.14 101,243,557.78 18,184,295.94

% on Sales 100% 25.32% 64.39% 11.57%


Observations: The Total Government Sales was Rs. 40,700,031.41 out of which Rs.3,448,944.00

was received on or before due date and Rs. 30,740,450.95 was received post due date.

The Total Non Government Sales comprises to Rs.39,174,873.33 out of which Rs.4,850,687.49 came on time Rs. 28,554,100.48 was delayed.

The Total Export Sales amounts to Rs. 77,355,437.84 out of which Rs. 31,506,385.65 was received on time and Rs. 41,949,006.35 were delayed.

The Pending amount for the month of October’08 is Rs.18,184,295.94.

It has been observed that 8.47% of the government customers pay on time where as 12.38% non government customers pay on time, however export is at the top with around 40.73% customers paying on time.

When it comes to paying post due date government customers are on top with 75.53% and Non Government customers are right behind them with 72.89%.

Comparatively it can be said that export clients have only 54.23%.

When compared with non government and government segment export segment has a better performance in terms of paying on time.

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The Graph above is the representation of the percentage of amount received on or before due date, amount received post due date and the pending amount for each of

the different segments.

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INTEREST COST ANALYSIS for the month of OCTOBER – by segment

Observations:

The Total Financial Loss in the month of October ’08 is of Rs. 2,386,814.45

The Interest cost incurred for Export amounts to Rs. 556,241.79

The interest cost incurred on Non Government Organizations is Rs. 743,220.09

The Interest cost barred by the company on Government Organizations is

Rs. 1,087,352.56

It is thus observed that Government Organizations cause around 45.56% Financial Loss as compared to Non Government with a 31.14% and Export with a 23.30%.

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Sales v/s Collection AnalysisFor the sales of the month - NOVEMBER

Invoice Amount Amt Rcvd on Time Amt Rcvd Post Due Date Pending Amt

163,559,415.54 75,485,650.26 76,018,672.22 10,423,905.39100.00% 46.15% 46.48% 6.37%

The table represents of the entire sales in the month of November ’08 how much was collected on time and how much was collected post due date, finally leaving the pending amount yet to be received. The data has also been graphically represented with a pie chart.

It is observed that out of the entire sales around 46.15% was collected on time where as 46.48% was collected post due date leaving with 6.37% still pending.

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Sales v/s Collection AnalysisFor the month - NOVEMBER - by segment

All the debtors have been segregated into Government organizations, Non Government Organizations and Export clients. Accordingly their respective collection details is mentioned by dividing the data into amount received on time. Amount received post due date and final pending amount.

NOV Invoice AmtAmt Rcvd On

TimeAmt Rcvd after

due datePending Amt

GOVT 64,058,038.55 5,404,305.00 50,664,833.27 5,969,315.76

% on Sales 100% 8.44% 79.09% 9.32%

NG 38,710,095.10 22,066,022.80 12,244,902.85 3,513,548.81

% on Sales 100% 57.00% 31.63% 9.08%

EXPORT 60,791,281.89 48,015,322.46 13,108,936.10 941,040.82

% on Sales 100% 78.98% 21.56% 1.55%

NOV TOTAL 163,559,415.54 75,485,650.26 76,018,672.22 10,423,905.39

% on Sales 100% 46.15% 46.48% 6.37%


Observations: The Total Government Sales was Rs. 64,058,038.55 out of which Rs.

5,404,305.00 was received on or before due date and Rs. 50,664,833.27 was received post due date.

The Total Non Government Sales comprises to Rs. 38,710,095.10 out of which Rs.22,066,022.80 came on time Rs. 12,244,902.85 was delayed.

The Total Export Sales amounts to Rs. 60,791,281.89 out of which Rs. 48,015,322.46 was received on time and Rs. 13,108,936.10 was delayed.

The Pending amount for the month of November is Rs. 10,423,905.39

The government clients are very much inconsistent in paying back on time as compared to non government and export clients.

It is observed that mere 8.44% clients have paid on time were as 57.00% of Non Government and a major 78.98% Export customers have paid on time.

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INTEREST COST ANALYSIS for the month of NOVEMBER - by segment

Observations:

The Total Financial Loss in the month of November ’08 is of Rs. 1,590,639.45




Rs. 1,121,177.03

It is thus observed that Government Organizations cause around 70.49% Financial Loss as compared to Non Government with a 25.18% and Export with a minor 4.33%

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Sales v/s Collection AnalysisFor the month - DECEMBER

- By segmentAll the debtors have been segregated into Government organizations, Non Government Organizations and Export clients. Accordingly their respective collection details are mentioned by dividing the data into amount received on time. Amount received post due date and final pending amount.

DEC Invoice AmtAmt rcvd on

timeAmt rcvd post

Due DatePending amt

GOVT 57,669,710.95 14,092,253.32 36,746,258.88 6,782,640.32

% on Sales 100% 24.44% 63.72% 11.76%

NG 31,725,054.40 14,944,447.08 15,999,239.24 821,738.95

% on Sales 100% 47.11% 50.43% 2.59%

EXPORT 54,432,944.13 26,242,106.08 20,681,484.12 7,506,896.42

% on Sales 100% 48.21% 37.99% 13.79%

DEC TOTAL

143,827,709.48 55,278,806.48 73,426,982.24 15,111,275.69

% on Sales 100% 38.43% 51.05% 10.51%






The Pending amount for the month of December is Rs. 15,111,275.69

It is observed that 24.44% Government clients have paid on time were as 47.11% of Non Government clients have paid on time and 48.21% Export customers have paid on time.

These figures show that Export Segment is more efficient on paying back their dues on time.

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INTEREST COST ANALYSIS for the month of DECEMBER - By segment

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Observations: The Total Financial Loss in the month of December’08 is of Rs. 2,308,178.31


The interest cost incurred on Non Government Organizations is Rs.206,969.56


Rs. 1,119,782.73

It is thus observed that Government Organizations cause around 48.51% Financial Loss as compared to Non Government with a 8.79% and Export with a 42.52% Financial Loss.

Sales v/s Collection AnalysisFor the month - JANUARY

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JAN Invoice AmtAmt Rcvd On

TimeAmt Rcvd Post

Due DatePending Amt

GOVT 61,977,111.00 2,446,814.98 57,777,157.06 1,723,883.02

% on Sales 100% 3.95% 93.22% 2.78%

NG 42,939,670.98 23,802,031.71 14,383,789.34 4246561.62

% on Sales 100% 55.43% 33.50% 9.89%

EXPORT 13,328,100.41 1,951,591.46 11,376,508.81 0.00

% on Sales 100% 14.64% 85.36% 0.00%

JAN TOTAL

118,244,882.39 28,200,438.15 83,537,455.21 5,970,444.64

% on Sales 100% 23.85% 70.65% 5.05%






The Pending amount for the month of January’09 is Rs. 5,970,444.64

It is observed that only 3.95% Government clients have paid on time were as 55.43% of Non Government clients have paid on time and 14.64% Export customers have paid on time.

These figures show that Non-Government Segment is more efficient on paying back their dues on time.

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INTEREST COST ANALYSIS for the month of JANUARY-by segment

Observations:

The Total Financial Loss in the month of January’09 is of Rs. 1,535,182.88


The interest cost incurred on Non Government Organizations is Rs.447,222.75


Rs. 1,028,116.57

It is thus observed that Government Organizations cause around 66.97% Financial Loss as compared to Non Government with a 29.13% and Export with 3.90% Financial Loss.

Sales v/s Collection AnalysisFor the month - FEBRUARY

- By segment

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All the debtors have been segregated into Government organizations, Non Government Organizations and Export clients. Accordingly their respective collection details are mentioned by dividing the data into amount received on time. Amount received post due date and final pending amount.

FEB Invoice AmtAmt Rcvd On

TimeAmt Rcvd Post

Due DatePending Amt

GOVT 51,910,679.00 12,481,839.24 32,902,497.00 6,526,342.76

% on Sales 100% 24.04% 63.38% 12.57%

NG 23,159,699.12 7,418,323.36 5,895,499.23 9,845,876.53

% on Sales 100% 32.03% 25.46% 42.51%

EXPORT 41,584,006.85 9,281,758.33 0.00 32,770,437.15

% on Sales 100% 22.32% 0.00% 78.81%

FEB TOTAL

116,654,384.97 29,181,920.93 38,797,996.23 49,142,656.44

% on Sales 100% 25.02% 33.26% 42.13%





The Total Export Sales amounts to Rs. 41,584,006.85 out of which Rs. 9,281,758.33 was received on time.

The Pending amount for the month of Febraury’09 is Rs. 49,142,656.44


These figures show that Non-Government Segment is more efficient on paying back their dues on time.

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INTEREST COST ANALYSIS for the month of FEBRUARY- By segment

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Observations:

The Total Financial Loss in the month of January’09 is of Rs. 1,790,997.36




Rs. 927,855.62


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Sales v/s Collection AnalysisFor the month - MARCH


MAR Invoice AmtAmt Rcvd On

TimeAmt Rcvd Post

Due DatePending Amt

GOVT 72,811,155.40 36,369.00 971,446.00 71,803,340.40

% on Sales 100% 0.05% 1.33% 98.62%

NG 42,074,589.84 7,072,245.83 9,688,837.00 20,274,434.01

% on Sales 100% 16.81% 23.03% 48.19%

EXPORT 17,906,532.96 3,808,741.60 12,182,573.48 2,396,196.97

% on Sales 100% 21.27% 68.03% 13.38%

MAR TOTAL

132,792,278.20 10,917,356.43 22,842,856.48 94,473,971.38

% on Sales 100% 8.22% 17.20% 71.14%* Figures of different segments are in Rupees

Observations: The Total Government Sales was Rs. 72,811,155.40 out of which Rs. 36.369.00

was received on or before due date and Rs. 971,446.00 was received post due date.


The Total Export Sales amounts to Rs. 17,906,532.96 out of which Rs. 3,808,741.60 was received on time and Rs. 12,182,573.48 was delayed

The Pending amount for the month of March’09 is Rs. 94,473,971.38.


These figures show that Export Segment is more efficient on paying back their dues on time.

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INTEREST COST ANALYSIS for the month of MARCH- By segment

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Observations: The Total Financial Loss in the month of January’09 is of Rs. 1,603,555.74

The Interest cost incurred for Export amounts to Rs. 80,050.87.



Rs. 1,205,482.30


INTEREST COST ANALYSIS MONTH WISE

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The table below represents the entire interest loss incurred by the company over the period of October’08 to March’09. Further the data has been graphically represented with

a bar diagram.

ANALYSIS OF

OCT NOV DEC JAN FEB MAR

INTEREST COST 2,386,814.44 1,590,639.45 2,308,178.31 1,535,182.88 1,790,997.36 1,630,555.74

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ANALYSIS OF DEBTORS GROUP WISE

The customers have been segregated group wise with respective group heads and managers handling their orders. The analysis is now done on the basis of each group for every individual month from October’08 to March’09

Sales v/s Collection AnalysisFor the month - OCTOBER - by GROUP

OCTOBER Invoice AmtAmt Rcvd On

TimeAmt Rcvd after

due datePending Amt

GROUP A 41,452,219.14 5,782,654.17 31,791,962.28 4,493,425.54

% ON SALES

100% 13.95% 76.70% 10.84%

GROUP B 32,583,995.64 54,288.00 24,126,113.52 8,340,395.48

% ON SALES

100% 0.17% 74.04% 25.60%

GROUP C 1,720,640.98 0.00 1,720,640.98 0.00

% ON SALES

100% 0.00% 100.00% 0.00%

GROUP D 2,929,195.95 2,442,929.32 485,951.26 0.00

% ON SALES

100% 83.40% 16.59% 0.00%

GROUP E 1,188,853.03 19,760.00 1,169,093.39 6,447.43

% ON SALES

100% 1.66% 98.34% 0.54%

GROUP F 77,355,437.84 31,506,385.65 41,949,006.35 5,344,027.49

% ON SALES

100% 40.73% 54.23% 6.91%

TOTAL 157,230,342.58 39,806,017.14 101,242,767.78 18,184,295.94

*the figures of different groups are in Rupees.

Observations:

When all the groups are compared it is seen that Group D has the best collection performance with 83.40% of its invoices collected on time.

Group F comes Second best with 40.73% collected on time followed by Group A with 13.95%.

Group C has the worst collection performance with zero invoices collected on time.

Group E has collected 1.66% on time and Group B has collected 0.17% on time.

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Sales v/s Collection AnalysisFor the month - NOVEMBER - by GROUP

NOVEMBER Invoice AmtAmt Rcvd On

TimeAmt Rcvd after due

datePending Amt

GROUP A 39,513,295.12 4,338,890.43 32,237,683.21 2,608,400.47

% ON SALES 100% 10.98% 81.59% 6.60%

GROUP B 38,698,564.12 6,977,639.65 26,228,046.29 3,467,133.46

% ON SALES 100% 18.03% 67.78% 8.96%

GROUP C 8,400,000.66 4,310,297.00 639,340.61 2,893,465.05

% ON SALES 100% 51.31% 7.61% 34.45%

GROUP D 9,881,049.52 8,600,755.40 766,428.53 513,865.59

% ON SALES 100% 87.04% 7.76% 5.20%

GROUP E 6,275,224.23 3,242,745.32 3,038,237.48 0.00

% ON SALES 100% 51.68% 48.42% 0.00%

GROUP F 60,791,281.89 48,015,322.46 13,108,936.10 941,040.82

% ON SALES 100% 78.98% 21.56% 1.55%

TOTAL 163,559,415.54 75,485,650.26 76,018,672.22 10,423,905.39


Observations:

When all the groups are compared it is seen that Group D has the best collection

performance with 87.04% of its invoices collected on time.

Group F comes Second best with 78.98% collected on time followed by Group E

with 51.68%.

Group A has the worst collection performance with 10.98% invoices collected on

time.

Group B has collected 18.03% on time and Group C has collected 51.31%.

36

Sales v/s Collection AnalysisFor the month - DECEMBER - by GROUP

DECEMBER Invoice AmtAmt Rcvd On


datePending Amt

GROUP A 49,296,198.71 13,430,138.12 30,029,150.79 5,836,909.80

% ON SALES 100% 27.24% 60.92% 11.84%

GROUP B 26,542,476.63 7,291,999.92 18,327,936.93 914,352.22

% ON SALES 100% 27.47% 69.05% 3.44%

GROUP C 878,985.96 554,440.33 188,425.00 136,120.63

% ON SALES 100% 63.08% 21.44% 15.49%

GROUP D 3,914,046.12 3,030,158.05 166,891.45 716,996.62

% ON SALES 100% 77.42% 4.26% 18.32%

GROUP E 8,763,057.93 4,729,963.98 4,033,093.95 0.00

% ON SALES 100% 53.98% 46.02% 0.00%

GROUP F 54,432,944.13 26,242,106.08 20,681,484.12 7,506,896.42

% ON SALES 100% 48.21% 37.99% 13.79%

TOTAL 143,827,709.48 55,278,806.48 73,426,982.24 15,111,275.69


Observations:

After the comparison of all Groups it is seen that Group D has the best collection performance with 77.42% of its invoices collected on time.

Group C comes Second best with 63.08% collected on time followed by Group E with 53.98%.

Group A has the least collection performance with 27.24% invoices collected on time.

Group B has collected 27.47% on time and Group F has collected 48.21% on time.

Sales v/s Collection Analysis

37

For the month - JANUARY - by GROUP

JANUARY Invoice AmtAmt Rcvd On


datePending Amt

GROUP A 66,612,637.00 11,691,079.82 51,591,559.24 3,188,888.41

% ON SALES 100% 17.55% 77.45% 4.79%

GROUP B 25,618,561.12 11,112,431.10 13,245,597.00 1,221,499.02

% ON SALES 100% 43.38% 51.70% 4.77%

GROUP C 2,229,759.00 586,794.00 1,435,534.00 207,431.00

% ON SALES 100% 26.32% 64.38% 9.30%

GROUP D 2,913,064.62 1,003,784.77 477,213.23 1,096,816.62

% ON SALES 100% 34.46% 16.38% 37.65%

GROUP E 7,542,760.24 1,854,757.00 5,411,042.93 116,479.00

% ON SALES 100% 24.59% 71.74% 1.54%

GROUP F 13,328,100.41 1,951,591.46 11,376,508.81 0.00

% ON SALES 100% 14.64% 85.36% 0.00%

TOTAL 118,244,882.39 28,200,438.15 83,537,455.21 5,831,114.05*the figures of different groups are in Rupees.

Observations:

After the Group wise analysis it is seen that Group B has the best collection performance with 43.38% of its invoices collected on time.

Group D comes Second best with 34.46% collected on time followed by Group C with 26.32%.

Group F has the least collection performance with 14.64% invoices collected on time.

Group B has collected 27.47% on time and Group E has collected 24.59% on time.

Sales v/s Collection AnalysisFor the month - FEBRUARY - by GROUP

38

FEBRAURY Invoice AmtAmt Rcvd On

TimeAmt Rcvd after

due datePending Amt

GROUP A 26,353,409.00 82,566.68 25,217,208.00 1,053,634.32

% ON SALES 100% 0.31% 95.69% 4.00%

GROUP B 23,567,066.00 17,729,112.24 3,928,415.00 1,909,538.76

% ON SALES 100% 75.23% 16.67% 8.10%

GROUP C 16,769,791.00 0.00 4,127,922.00 12,641,869.00

% ON SALES 100% 0.00% 24.62% 75.38%

GROUP D 1,442,217.00 872,760.68 57,059.09 512,397.23

% ON SALES 100% 60.52% 3.96% 35.53%

GROUP E 6,937,895.12 1,215,723.00 5,467,392.14 254,779.98

% ON SALES 100% 17.52% 78.80% 3.67%

GROUP F 41,584,006.85 9,281,758.33 0.00 32,770,437.15

% ON SALES 100% 22.32% 0.00% 78.81%

TOTAL 116,654,384.97 29,181,920.93 38,797,996.23 49,142,656.44*the figures of different groups are in Rupees.

Observations:

After the group wise analysis it is clear that Group B has been most efficient in collecting the receivables with about 75.23% collected on or before due date.

It is followed by Group D with 60.52% of its Invoices collected on time. Then after a huge difference third position is taken by Group F with 22.32%

collected on time. Group E has been able to collect 17.52% of its invoices. Group A and Group C have been the least performing groups.

Sales v/s Collection AnalysisFor the month - MARCH - by GROUP

MARCH Invoice Amt Amt Rcvd On Amt Rcvd after due Pending Amt

39

Time date

GROUP A 39,383,608.00 688,632.00 0.00 38,694,977.00

% ON SALES 100% 1.75% 0.00% 98.25%

GROUP B 38,723,561.40 2,200,000.00 1,788,213.00 35,246,118.40

% ON SALES 100% 5.68% 4.62% 91.02%

GROUP C 26,032,560.00 23,070.00 6,935,859.00 19,073,631.00

% ON SALES 100% 0.09% 26.64% 73.27%

GROUP D 2,272,525.00 461,172.91 129,606.00 1,681,746.09

% ON SALES 100% 20.29% 5.70% 74.00%

GROUP E 8,473,490.84 3,735,739.92 1,806,605.00 2,931,145.92

% ON SALES 100% 44.09% 21.32% 34.59%

GROUP F 17,906,532.96 3,808,741.60 12,182,573.48 2,396,196.97

% ON SALES 100% 21.27% 68.03% 13.38%

TOTAL 132,792,278.20 10,917,356.43 22,842,856.48 100,023,815.38


Observations: It has been observed that when it comes to paying on time Group E has been the

best with 44.09% of its customers paying on of before due date.

Group F has about 21.27% of its sales receiving on time which puts in the second

position followed by Group D with a 20.29% collected on time.

Group A has a very bad collection performance as around 98.25% of the amount

is yet to be received.

It is followed by Group B and Group D with 76.67% and 74.00% pending

respectively.

40

Sales v/s Collection Analysis - By MANAGER

Sales v/s Collection Analysis of Mr. WALIMBE

WALIMBE OCT NOV DEC JAN MAR TOTAL

INVOICE AMT 11,273,956.29 711,049.98 4,577,614.01 14,322,499.00 3,879,356.00 34,764,475.28

AMT RCVD ON TIME

0.00 525,162.76 0.00 11,017,868.00 0.00 11,543,030.76

% ON SALES 0.00% 73.86% 0.00% 76.93% 0.00% 33.20%

AMT RCVD POST DUE DATE

11,180,490.17 149,503.46 4,577,614.01 940,235.00 0.00 16,847,842.64

% ON SALES 99.17% 21.03% 100.00% 6.56% 0.00% 48.46%

PENDING AMT 84,098.00 35,294.76 0.00 2,364,396.00 3,879,356.00 6,363,144.76

% ON SALES 0.75% 4.96% 0.00% 16.51% 100.00% 18.30%*the figures of are in Rupees.

Observations: Mr. Walimbe handles Power Cables and the has been good collection performances in the month of November’08 with 73.86% of the invoices

collected on time and in January with 76.93% of the invoices collected on time.

In the month of October’08, December’08 and March’09, none of the receivables have been collected on time.

In the month of October however 99.17% of the invoices was received post due date. The same was the case in the month of December’08 with 100.00% received post due date.

Over all Mr. Walimbe has Collected 33.20% on time and 48.46% post due date leading to a pending amount of 18.30%.

41

Sales v/s Collection Analysis of Mr. Lad

LAD OCT NOV DEC JAN FEB MAR TOTAL

INVOICE AMT 11,831,407.52 7,195,144.95 12,406,166.71 8,389,542.00 3,494,951.00 18,889,169.00 62,206,381.18

AMT RCVD ON TIME

3,435,504.00 754,136.00 0.00 0.00 0.00 36,369.00 4,226,009.00

% ON SALES 29.04% 10.48% 0.00% 0.00% 0.00% 0.19% 6.79%

AMT RCVD POST DUE

DATE7,256,065.11 6,366,589.00 11,260,959.87 7,722,619.00 2,742,618.00 0.00 35,348,850.98

% ON SALES 61.33% 88.48% 90.77% 92.05% 78.47% 0.00% 56.83%

PENDING AMT

1,767,450.64 74,419.95 1,145,206.84 527,592.41 752,333.00 18,852,800.00 23,119,802.84

% ON SALES 14.94% 1.03% 9.23% 6.29% 21.53% 99.81% 37.17%*the figures of different groups are in Rupees.

Observations: Mr. Lad handles Power Cables and there has been a very poor collection rate throughout the six months with highest being 29.04% in the month of

October’08

Mr. Lad has collected the invoices post due date with 61.33% in October, 88.48% in November, 90.77% in December, 92.05% in January and 78.47% in February.

The invoices of Mr. Lad in the month of March’09 have not been collected with the entire amount pending till date.

42

Sales v/s Collection Analysis of Mr. Praveen Patel

PRAVEEN PATEL

OCT NOV DEC JAN FEB MAR TOTAL

INVOICE AMT 13,747,736.79 2,689,141.00 545,522.85 884,110.00 72,164.00 652,262.00 18,590,936.64

AMT RCVD ON TIME

2,347,150.17 2,118,440.67 513,138.12 673,211.82 67,762.68 652,263.00 6,371,966.46

% ON SALES 17.07% 78.78% 94.06% 76.15% 93.90% 100.00% 34.27%

AMT RCVD POST DUE

DATE11,384,865.47 243,675.99 32,384.73 210,898.18 0.00 0.00 11,871,824.37

% ON SALES 82.81% 9.06% 5.94% 23.85% 0.00% 0.00% 63.86%

PENDING AMT 13,299.89 0.00 0.00 0.00 4,401.32 0.00 17,701.21


Observations: Mr. Praveen Patel handles Power Cables. Over the period of six months he has had a good collection in the month of December, February, and March

with 94.06%, 93.90% and 100.00% respectively.

Mr. Praveen Patel has very minimum pending amount.

Over all he has collected 34.27% on time, 63.86% post due date and 0.10% is still pending.

43

Sales v/s Collection Analysis of Mr. Om Parwal

OM PARWAL NOV DEC JAN MAR TOTAL

INVOICE AMT 4,245,703.09 19,187,967.06 20,244,996.00 9,218,040.00 52,896,706.15

AMT RCVD ON TIME

0.00 12,717,000.00 0.00 0.00 12,717,000.00

% ON SALES 0.00% 66.28% 0.00% 0.00% 24.04%AMT RCVD POST DUE

DATE4,237,287.97 6,470,967.06 20,243,217.06 0.00 30,951,472.09

% ON SALES 99.80% 33.72% 99.99% 0.00% 58.51%PENDING AMT 8,434.56 0.00 0.00 9,218,040.00 9,226,474.56

% ON SALES 0.20% 0.00% 0.00% 100.00% 17.44% *the figures of different groups are in Rupees.

Observations: In the month of November 99.80% was collected post due date.

In the month of December 66.28% was collected on time which is better when compared with the previous month and 33.72% was collected post due date.

In the month of January 100% was collected post due date leading to zero pending amount.

In the month of March the collection performance dropped with 100.00% amount pending till date.

Overall for the period of six months, Mr.Om Parwal has collected 24.04% on time, 58.51% post due date and has 17.44% still pending to his account.

44

Sales v/s Collection Analysis of Mr. Kanesan

KANESAN OCT NOV DEC JAN FEB MAR TOTAL

INVOICE AMT 4,587,123.54 24,650,450.31 11,543,414.96 22,771,490.00 22,771,490.00 6,730,373.00 93,054,341.81

AMT RCVD ON TIME

0.00 941,151.00 0.00 0.00 0.00 0.00 941,151.00

% ON SALES 0.00% 3.82% 0.00% 0.00% 0.00% 0.00% 1.01%AMT RCVD POST DUE

DATE1,959,336.53 21,218,821.00 6,851,712.00 22,474,590.00 22,474,590.00 0.00 74,979,049.53

% ON SALES 42.71% 86.08% 59.36% 98.70% 98.70% 0.00% 80.58%

PENDING AMT 2,627,787.01 2,490,251.20 4,691,702.96 296,900.00 296,900.00 6,730,373.00 17,133,914.17


Observations: Mr. Kanesan has been performing very bad when it comes to collecting his invoices on time.

In the month of October he has collected 42.71% post due date and in November 86.08% was collected post due date.

Accordingly in the month of December 59.36%, 98.70% in January and February was collected post due date.

Over all 1.01% was collected on time, 80.585 was collected post due date and 18.41% is still pending.

Sales v/s Collection Analysis of Mr. Jitendra Podar

45

JITENDRA PODAR

OCT NOV DEC FEB MAR TOTAL

INVOICE AMT 11,995.00 21,805.79 1,035,513.12 14,804.00 14,408.00 1,098,525.91

AMT RCVD ON TIME

0.00 0.00 200,000.00 14,804.00 0.00 214,804.00

% ON SALES 0.00% 0.00% 19.31% 100.00% 0.00% 19.55%


11,205.00 21,805.79 835,513.12 0.00 0.00 868,523.91

% ON SALES 93.41% 100.00% 80.69% 0.00% 0.00% 79.06%

PENDING AMT 790.00 0.00 0.00 0.00 14,408.00 15,198.00

% ON SALES 6.59% 0.00% 0.00% 0.00% 100.00% 1.38% *the figures of different groups are in Rupees.

Observations: Mr. Jitendra Podar belongs to Group A handling Power Cables. He has not been able to collect his invoices on time.

Overall in the period of six months he has collected around 19.55% on time, 79.06% post due date and 1.38% is still pending

46

Sales v/s Collection Analysis of Mr. Suresh

SURESH OCT NOV DEC JAN FEB MAR TOTAL

INVOICE AMT 25,074,421.82 26,905,963.94 13,574,194.42 15,045,952.00 13,526,118.00 30,030,100.40 124,156,750.58

AMT RCVD ON TIME

40,848.00 4,762,266.55 1,911,978.10 2,446,814.98 12,481,839.24 2,200,000.00 23,843,746.87

% ON SALES 0.16% 17.70% 14.09% 16.26% 92.28% 7.33% 19.20%


16,695,005.04 18,748,761.18 11,008,914.49 11,795,618.00 177,281.00 816,767.00 59,242,346.71

% ON SALES 66.58% 69.68% 81.10% 78.40% 1.31% 2.72% 47.72%

PENDING AMT 8,340,395.48 3,388,568.34 694,932.63 764,485.02 866,997.76 27,524,103.40 41,579,482.63


Observations: In the month of October’08 there was a poor collection rate with only 0.16% of its invoices collected on time. Later on we see a stable improvement with 17.70% collected in November’08, 14.09% in December’09, 16.26% in January. There was a huge leap to the top with 92.28% collected in time in the month of February’09. There on we see a major fall with only 7.33% collected on

time. Over all in the period of six month from October’08 to March’09 19.20% has been collected on or before due date where as 47.72% has been collected

post due date and 33.49% is still pending from his customers.

Sales v/s Collection Analysis of Mr. Ekambaram

EKAMBARAM OCT NOV DEC JAN FEB MAR TOTAL

47

INVOICE AMT 7,509,573.82 11,792,600.18 12,968,282.21 10,572,609.12 10,040,948.00 8,693,461.00 61,577,474.33

AMT RCVD ON TIME

13,440.00 2,215,373.10 5,380,021.82 8,665,616.12 5,247,273.00 0.00 21,521,724.04

% ON SALES 0.18% 18.79% 41.49% 81.96% 52.26% 0.00% 34.95%


7,431,108.48 7,479,285.11 7,319,022.44 1,449,979.00 3,751,134.00 971,446.00 28,401,975.03

% ON SALES 98.96% 63.42% 56.44% 13.71% 37.36% 11.17% 46.12%

PENDING AMT 0.00 78,565.12 219,419.59 457,014.00 1,042,541.00 7,722,015.00 9,519,554.71

% ON SALES 0.00% 0.67% 1.69% 4.32% 10.38% 88.83% 15.46%


Observations:

In the month of October’08, Mr. Ekambaram has not been able to collect his receivables effectively which is showcased by his very poor 0.18% collection taken place on or before due date.

In the month of November’08 there was a slight improvement with 18.79% of the invoices collected on time. Thereon it has been improving with 41.49% in December’08 and 81.96% in January’09. Then there was a slight slip in the scale with only 52.26%

collected on time. Mr. Ekambaram has been efficient in collecting his invoices even if they have been collected post due date. This is understood b the minimum Pending

amount over the period of six months. In month of March’09 however there was a major 88.83% pending. Over all for the six months Mr. Ekambaram has been able to collect 34.95% on or before due date and 46.12% post due date leading to 15.46% still

Pending.

48

FINDINGS FROM THE RESEARCH

REASONS FOR DELAY:

Many a times it was observed that the debtors didn’t pay UNIFLEX CABLES LIMITED on the agreed payment terms. The reasons for such a delay were found out by interacting with the respective sales managers. It was found out that reasons were such that some could be controlled and some of the reasons were out of the company’s control. Accordingly the reasons for delay in receiving the credit amount from customers have been divided into controllable reasons and uncontrollable reasons. The following mentioned below are the general reasons for delay over the period of 6 months i.e. October’08 to March’09:

CONTROLLABLE REASONS: Late delivery :

Many a times the customers delay the payments because we made a delay in delivering the cables to them. Our customers are such that they use this cables for a certain project. Any delay made by us puts their project on hold.

SUGGESTION: This kind of delay could be avoided with a help of a proper production plan which would in turn help us in completing the order on time and delivering it to the customer on time. E.g.: ABG Shipyard

Transportation documents not received on time :Normally goods are transported to the customers place via road. In this process the

transporter carries a lorry receipt which is acknowledged by the customer and then the transporter brings the receipted challan back to us. It has been observed that the transporter in many cases has taken more time to bring the receipted challan back to the office. If the receipted challan is not received on time we cannot send the proof documents to the customers. The issue is that the customers do not release the payment unless all the necessary proof documents are submitted.

SUGGESTION: Whenever the transporter delays in bringing the receipted challan he should be held responsible for his acts n if possible charged with a penalty by deducting a certain amount for his transport charges payable. This is because the amount of damage caused to us is much more in terms in interest cost.

E.g.: Stewarts & Lloyds of India Ltd.

49

Quality issues :When an order is placed the customers expect a certain standard quality for the

cables. There are situations where we have not been able to manufacture according to the expected quality levels. Customers have returned the cables and stopped the payment until the cables are remanufactured according to their specifications and re-supplied to them. Also lot of time is wasted until the cables are manufactured again and delivered. This time is crucial for the company. Such delay cause huge financial loss and in turn affects the cash flow in the organization.

SUGGESTION: Here the production department has to take necessary precaution with respect to the quality levels of the product produced by them. The image of the brand is at stake. The production department needs to be given proper training so as to maintain the quality levels of the cables in each of its production.

E.g.: Neyvelli Liginite Corporation Ltd.

Inspection report not submitted :Each Order comes with certain terms. Customers ask for various reports like

Inspection Report, Type Test Report etc. These documents need to be prepared and sent to the customers then on receipt of these documents the customers release the payment. In many cases these reports were not prepared on time and not sent on time to the customers. The delay affected the timely receipt of payment from the customers. The administrative efficiency is checked in this case. If these cases are not avoided then there are chances of spoiling the customer relations.

SUGGESTION: We need to have a dedicated group of people working towards timely documentation and report preparations so as to avoid such a situation. We need to be constantly in touch with the inspection party and make sure that they come as soon as the order is ready so as to avoid the standby time.

E.g.: Nivo Controls Pvt Ltd

Quantity supplied more than tolerance level :In each order terms related to Tolerance levels are mentioned anything more or less to those units is not accepted. There has been a situation where in we submitted more than the tolerance level it was around 15metres which were rejected. After lot of persuasion the units were accepted and the payment was made. Due to the mere 15 meters payment for the rest of the cables was held up which caused a huge interest cost to the company.

SUGGESTION: The Production Department should take care of the units supplied and the tolerance level in each order. The authority involved should also check whether the production is taking place with respect to the terms of the contract to avoid such a delay.

E.g.: Central Railway

50

UNCONTROLLABLE REASONS: Cash flow problems from customer’s side :

In this current market situation lot of companies are facing cash flow problem. Due to unavailability of funds they have not been able to pay their creditors on time. We have no control over this situation. We could take action against late payment but it would only spoil our relations with the customer. E.g.: Suzlon Energy

Internal documentation problem :When a consignment reaches the factory of the customer there is a certain document prepared to intimate their accounts department about the arrival of Goods. Once the accounts department gets the intimation, it then releases the payment. There has been a situation where in there was a problem with in the customers office where this internal office document (like GRN/SRN etc.) was not prepared and the payment was delayed. E.g.: Tata Steel Ltd

No further sale done :Some of our customers are dealers. These dealers do not pay us unless there is a further sale done of the cables. We have no control over this situation; however we could change the payment terms of such customers and demand advance payment so as to avoid such a situation.

E.g.: Customers of Mr.Murli Nambiar

Government budget limitations :We have a huge government customer base. There is a short fall in this case that government departments have quarterly budget. Due to unavailability of funds we have to wait for the funds to be allotted until the next quarter. This causes huge financial loss but it is purely out of our hands to reduce such delays. E.g.: Central Railway, Department Of Space Shriharikota

Software issues in the customers office :Each company has its own way of recording its activities. One company had a new software i.e. SAP system installed which was not that user friendly. The employees involved were not accustomed to this system so recording of all the transactions was delayed. If proper recording of the receipt of order is not done, the payment is not cleared by the company. This is something which is not in our hands. E.g.: Mazgaon Dock Ltd.

51

RECOMMENDATIONS & SUGGESSTIONS

We should accept only profitable orders. Proper costing analysis has to be made once we receive orders.

Increased inflow of payments helped by a multi-channeled collections strategy.

A strong focus should be made on delivery schedule with a highly qualified operations team.

Focus on performance and compliance to deliver exceptional results that positively impact company image.

Before accepting any order we should check with the production department as when we would be able to complete the order and then intimate the customers.

Have a dedicated force working towards follow-up with customers.

Ensure quick response to customers’ needs so as to gain customer satisfaction.

Once the goods are delivered there should be quick work undertaken to submit the documents at the earliest.

In case of LC, we can have broker who could help us in quick completion of the procedures and receive the payment by discounting them.

In case of small consignments we could opt for advance payment terms.

Research should be made to find out which cables have more demand in the market. Accordingly investment should be made in that product type to ensure future growth.

It has been observed that cables used in underwater and cables used by naval force have huge demand. We should try an increase the efficiency in producing such products.

We could also hire third party authorities to collect the payments from the debtors.

We should have a monthly MIS manager wise NOD of debtors.

Use updated banking system to reduce the cash float (Like RTGS, Electronic Transfers. etc.)

To fix MEL (maximum exposure limit) to avoid huge over due in consultation with Marketing Team.

Our Marketing Team should have good relations with our all customers to enable us to get all information about the company.

In general systematic and organized completion of all the procedures would help in avoiding delays. However certain obstacles are bound to come upon but the company should at all times be prepared for all those obstacles. One way to overcome these obstacles is to anticipate all the problems that might arise and plan accordingly to handle them if not avoid them.

CONCLUSION

52

Overall after the study it has been observed that there is a lot of procedural delay in the system which has caused huge amounts of interest loss to the company. The company needs to concentrate on improving its efficiency in responding to the customer requests. There has to be a more smooth documentation process. After the merger with APAR INDUSTRIES LIMITED the company has been improving and achieving a more systematic system of operating. Even though there are lot of recommendations provided for the company’s receivables situation there are some constraints that come to our notice as we make an analysis which are as follows:

Limitations of the Company: Due to the competitive market we cannot have strict payment terms. We have to mould

according to the customers demand simply to provide customer satisfaction so as to ensure repeat orders.

Many customers are associated with this company for many years, so UNIFLEX CABLES LIMITED cannot take legal action in case they delay the payments. This would only spoil their customer relationships.

The company is currently not producing at its maximum capacity which is affecting its delivery schedule agreed with the customers & the customers in turn delay their payments if the cables are not delivered on time.

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BIBLIOGRAPHY

BOOKS

Accounts Receivables Management - John G. Salek Collection Management Handbook - Michael Coleman Financial Management - I.M.Pandey Financial Accounting – Dr.Kaustubh Sontakke

WEBSITES

www.wikipedia.com

www.unicab.com

www.apar.com

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http://www.apar.com/

http://www.unicab.com/

http://www.wikipedia.com/

Documents

Project on Receivables Mgmt