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.