Management of accounts receivables Management of Accounts Receivables Accounts receivable is the largest asset on the balance sheet in most of the organizations.
Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Receivable management is one of the most important aspects of the organization, as it deals with the management of the outstanding. The profit of the company mainly depends on the accounts receivables.
Therefore it needs a careful analysis and proper management. Debtors occupy an important position in the structure of current assets of Thesis for accounts receivable firm.
They are the outcome of rapid growth of trade credit granted by the firms to their customers. Trade credit is the most prominent force of modern business. It is considered as a marketing tool acting as a bridge for the movement of goods through production and distribution stages to customers. Till few years back, Tata Steel had a very strict policy of selling against advance payments.
That was an era of controlled economy. However, with an increasing domestic and international competition, Tata Steel could no longer afford this policy, in order to maintain its premium position. Further in order to capture a greater amount of market share, it was compelled to go by the industry norms and thus it ushered into the new era of credit sales.
This resulted in credit sales going up significantly. A credit limit was sanctioned to every customer. The customers were required to pay the outstanding amount on the due date.
INTRODUCTION Accounts receivable is an accounting transaction which deals with the billing of customer who owes money to a person, company or organization for goods and services that has been provided to the customers.
In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called credit or payment terms.
Receivables may be known as accounts receivables, trade creditors or customer receivable. Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has also entered the steel building and construction applications market. The iron ore mines and collieries in India give the Company a distinct advantage in raw material sourcing.
Also, Tata Steel has bought Exploration of opportunities in titanium dioxide business in Tamil Nadu, Ferro-chrome plant in South Africa and setting up of a deep-sea port in coastal Orissa are integral to the Growth and Globalisation objective of Tata Steel.
Tata Steel India is the first integrated steel company in the world, outside Japan, to be awarded the Deming Application Prize for excellence in Total Quality Management. The policy is influenced by the nature of market and strength of the competition.
The policy clearly defines the standard for target debtor level, which in turn is a significant influence both ion payment terms and on the whole of the credit control operation, since it determines how much tolerance, if any, is to be shown to slow paying customer.
The credit guidelines as they have emerged today are combined efforts of finance and marketing department. The credit control committee is headed by Sr. The committee meets at least in two months. The annual limit of credit sale is provided by Sr.
The committee then discusses in detail about the breakup of the above lump into the credit limits for different sales offices and also for various customers i. Hence the basic purpose this committee is to set the standard and also have the overall control of the credit situation, thereby keeping the financing of the working capital cost effective and preventing any liquidity problems from arising.
As a general rule, credit is allowed to customer who takes large and repeated orders. One time customers are not entertained for credit. However, special customer may be allowed a variance in the set credit period depending upon the volume of sales and customer relationships.
A constant touch with the customers is the best way of reminding him about his payment schedule in a polite but firm manner. A daily, weekly and monthly report regarding the total sale is done to keep a track on debtors and cash position. In case of secured credit where Tata Steel is also a debtor of its customers, it uses its accounts payable as tool to realize its accounts receivables.
In cases, which have the symptoms of becoming the bad, a reconciliation statement is prepared and the mutual agreement arrived at. However in the worst case legal action is pursued and bad debts are not written off before five year. A daily, weekly, monthly report regarding the sales is done to keep track on debtors and the cash position.
Phone; Fax; E-mail ;Letters ; Personal visit Managing the debtors for Tata steel is an important and chief function of the sales accounts division of finance and accounts.
All the transactions of commercial nature are dealt with by this department in a detailed outline frame of working.A DISCUSSION OF THIRTEEN FINANCIAL ACCOUNTING TOPICS by Jordan Barr A thesis submitted to the faculty of The University of Mississippi in partial fulfillment of the treatment of accounts receivable, U.S.
GAAP policies, the effects of depreciation expense, contingencies, long-term debt. Examine the five (5) steps to managing accounts receivable. Speculate on the step that is most vulnerable to fraud. Suggest at least two (2) actions that a company can take in . existing guidelines for the accounts receivable team have been updated in the process of the thesis development and follow-up material has been created by the author of the thesis in order to ensure correct labelling and archiving per company and country of listing.
Accounts Receivable Turnover = Net Sales/Average Net Account Receivables Accounts receivable turnover ratio measures the effectiveness of a company in extending credit and collecting debts. It is an activity ratio that measures how efficiently a firm uses its assets.
Accounts receivable is the largest asset on the balance sheet in most of the organizations. (Smith, C. W. ) This is considered to be the expensive asset.
Our services include essays, term papers, thesis papers, reports, formatting, dissertations among others. “Accounts Receivable Management” Please respond to the following: Examine the five (5) steps to managing accounts receivable.