MANAGEMENT OF ACCOUNT RECEIVABLE
& PAYABLE
BY - SRK
WHAT IS RECEIVABLE ?
Receivable are the asset accounts owned to the firm as a result of sales of goods/services in the ordinary course of business.
WHAT IS RECEIVABLE OF MANAGEMENT ?
The object of receivable management is to promote sales and profits until that point is reached where the return on investment in future funding of receivable is less than the cost of funds raised to finance that additional credit .
PURPOSE OF RECEIVABLE
Achieving growth in sales.
Increasing profits.
Meeting competitions.
COST OF MAINTAINING RECEIVABLE
Capital Costs.
Administrative Costs.
Collection Cost.
Defaulting Costs.
FACTORS AFFECTING THE SIZE OF RECEIVABLE
Level of Sales.
Credit Policy.
Terms of trade – Credit Period and Cash discounts.
POLICY OF MANAGING RECEIVABLE
Credit Standards.
Credit Standard – Credit Period and Cash discounts.
Collection Procedure.
WHAT IS PAYABLE ?
Management of account Payable is as much important as management of accounts receivable. The objective in case of account payable is to slow down the payments process as much as possible.