Legal Encyclopedia. Letter Y

Accounts receivable management

- Activities of the company, aimed at creating and monitoring the state of receivables. Accounts receivable is formed in the process of implementing the enterprise of its products on credit.

Activity in the US DZ consists of five stages:

1) the establishment of the enterprise satisfactory conditions for the sale of its products and product purchases from suppliers. In this respect, managers W. DZ need to decide what will be the duration of the period of payment for shipped products and the amount of extra charge for buyer credit;

2) assessment of the creditworthiness of each potential buyer with a large number of various sources of information about the customer;

3) to determine the contract with the buyer. The most risky form of sales are sales on open account, when it is not drawn up a written contract between the supplier and the buyer, as evidence that the seller should the buyer the money is recorded in the books of account of the seller and the bill of lading signed by the buyer.

In developed countries and in international trade tools W. DZ are commercial paper, trade acceptance and letter of credit.

The action of the commercial bill is determined as follows: the seller of a bill which obliges the purchaser to pay for the goods, and sends it to the buyer's bank, along with the documents about the shipment. If immediate payment this bill is a bearer-transferable and must be paid immediately on presentation, otherwise it is a term bill of exchange and is payable after a certain amount of time. Further actions of the buyer depends on how the bill is: if it is the bearer, then the buyer pays it, if bearer-transferable, the purchaser acknowledges the debt by adding the word "accepted" and puts his signature. The bank then sends the shipping documents to the buyer, and the money or accept a bill - the seller.

If the exporter requires a high degree of confidence in the solvency of the buyer, he may ask the buyer or his bank to issue an irrevocable letter of credit. In this case, the bank sends a notice to the exporter that opened in his name in the credit exporter bank. Then exporter of a bill on the buyer's bank and presents it to his bank, together with a letter of credit and shipping documents. The exporter's bank carries out the acceptance of bills or payment of money and sends the documents to the buyer's bank;

4) establish a "sensitive" loan limits. At this stage, the manager's job is to increase profits: that is, manager should increase buyer credit limits as long as the probability of payment, multiplied by the expected profit, will not exceed the probability of non-payment, multiplied by the cost of goods;

5) maintenance of control over the execution debtor's obligation for payment of receivables.