Managment Of Account Receivable Essay

4263 words - 18 pages

Management of Accounts Receivable
December 1997

Introduction The Accounts Receivable Process Re-Engineering Accounts Receivable Risk Management Use of Advanced Technology Debt Collection Processes Performance Measurement Appendix

This guide accompanies the Auditor-General’s Audit Report No. 29, Management of Accounts Receivable in the Commonwealth. It is intended to provide an overview of the current trends and "better practice" approaches that are being adopted by organisations in managing accounts receivable. In the commercial world the way in which organisations manage their accounts receivable has significant implications for the financial health of ...view middle of the document...

An effective accounts receivable function can assist in achieving the desired cash flow outcome through the timely collection of outstanding debts. All agencies also have an objective of continually improving customer service. A large number of agencies which operate as businesses are required to perform public services under a full or partial cost recovery arrangement. Effective accounts receivable management can assist agencies improve customer service through providing timely information on customer requirements and by making dealing with the agency as easy as possible. All government agencies, including those operating in a monopoly, are required to demonstrate contestability - that is delivery of a high quality standard of service at a cost that is comparable to providers of similar services operating in similar environments. Improvements in accounts receivable management which reduce the cost of collecting monies can improve an agency’s ability to demonstrate contestability and accountability. Importance of Organisational Culture An international receivables management benchmarking study commissioned by the Australian Taxation Office has highlighted the importance that organisational culture has in the successful management of accounts receivable. The study, which involved the survey of five international taxation agencies and eight domestic organisations for which accounts receivable is a strategic issue, indicated that management attitudes need to support practices for minimisation of debt. All agencies should adopt a culture whereby staff are encouraged to obtain payment, where required, and not just focus on program or service delivery. The Accounts Receivable Process A typical accounts receivable process is mapped below. The process commences with a receipt of a customer order and ends with the collection or write off of a debt. Financial management functions such as accounts receivable have been traditionally viewed as transaction processing activities. An international benchmarking study referred to in the Paying Accounts Better Practice Guide issued by the ANAO in November 1996 indicated that up to 65 per cent of time was spent on non-value added activities across all government and industry sectors. The study suggested that the elimination or reduction of non-value tasks can be effected through better work practices and automation of

processes. This can be achieved by analysing current processes and redesigning them to remove as much manual intervention as possible, reducing rekeying and appraisal activities and minimising operator error. An important part of this analysis is a formal, structured risk assessment which identifies and measures exposures associated with the accounts receivable process. The following diagram highlights the opportunities available for improvement through better practices. Significant advances in accounts receivable performance and process efficiency are available to agencies through the following...

Other Essays Like Managment of Account Receivable

Acct 551 Week 3 Essay

548 words - 3 pages 18,000 Acc Depr Machinery 221,000 Machinery 390,000 Gain or Disposal Machinery 11,000 180,000-(390,000-221,000) Gain on Restructuring of debt 38,000 (200,000+18,000)-180,000 Moran State Bank Machinery 180,000 Allowance for Doubtful Account 38,000 Notes Receivable 200,000 Interest Receivable 18,000 B They should reported it as ordinary gain C Moran State Bank Creditor Machinery

General Ledger Layout Essay

759 words - 4 pages .............................................................101 Services Revenue ...............................403 Received cash for services. 9 Accounts Receivable .................................106 Services Revenue ...............................403 Billed client for completed work. 12 Accounts Payable ......................................201 Cash .....................................................101 Paid balance due on account. 19

Baldwin Bicycle Case Study

894 words - 4 pages | Baldwin Bicycle Case Study | Strategic Cost Managment | | Submitted to-Mr. Suneel Maheshwari | | By- Sourabh Dhawan- Nooruddin Hussain Nimisha Rathi Tulika Singhal | 1. What is the relevant cost of manufacturing a challenger bike? Present Situation |   |   |   | Total Revenue |   | 10872000 |   | Units sold |   | 98791 |   | P.U Price |   | 110.0505 |   |   |   |   |   |   |   |   |   | Hi Valu

Fundamentals of Accounting

923 words - 4 pages 2017? 16. If the truck was sold on December 31, 2017 for P560,000, how much is the Gain or Loss on Sale? (Indicate if Gain or Loss) PROBLEM 7 Accounts Receivable at the end of the year amounted to P900,000. Allowance for doubtful accounts at the beginning of the year amounted to P12,300. It is the company policy to increase allowance to 8% of outstanding account receivable. 17. How much is the Bad Debts Expense for the year

Organizational Behavior

619 words - 3 pages . | | |   | | | | | 6. | | All fiscal years are calendar years, but not all calendar years are fiscal years. | | | Account | | Type of Adjustment | | Related Account | Accounts Receivable | | | | |   | | | | | Prepaid Insurance | | | | |   | | | | | Accumulated Depreciation—Equipment | | | | |   | | | | | Interest Payable | | | | |   | | | | | Unearned Service Revenue


2271 words - 10 pages , or paid out as dividends, share repurchases or debt repayments. 4. Receivables, also termed as trade credit or debtors are component of current assets. When a firm sells its product in credit, account receivables are created. 5. Account receivable is the money receivable in some future date for the credit sale of goods and services at present. These days, most business transactions are in credit. Most companies, when they face competition

Ethics and Compliance - Starbucks

1858 words - 8 pages like to follow. Financial Performance Two Most Recent Years STARBUCKS CORPORATION (In millions) Fiscal Year ending 09/27/09 Fiscal Year ending 09/28/08 BALANCE SHEET Account Receivable $271.0 329.5 Current Assets $2,035.8 $1,748.0 Total Assets $5,576.8 $5,672.6 Current Liabilities $1,581.0 $2,189.7 Total Liabilities $2,531.1 $3,181.7 Total Shareholder’s Equity $3,045.7 $2,490.9 INCOME STATEMENT Company-operated retail $8,180.1

Chapter 2 Modern Building Supply

1154 words - 5 pages Modern Building Supply sells various building materials to retail outlets. The company has just approached Linden State Bank requesting a $300,000 loan to strengthen the Cash account and to pay certain pressing short-term obligations. The company’s financial statements for the most recent two years follow: [pic] .:. During the past year, the company has expanded the number of lines that it carries in order to stimulate sales and increase

Term Paper

636 words - 3 pages , timely and accurate way that also supports the overall goals of the department and | | |the company. | | |Accounts Receivable and Order Management Processes: |70% | |Perform accounts receivable activities including: cash application


819 words - 4 pages 10-Apr 50 units @ $1,800 1,100,000 10 units @ $2,000 19-Apr GENERAL JOURNAL DATE ACCOUNTS 8-Mar Inventory (120 x $1,800) Account Payable Record purchase of inventory on account. $ 90,000 36,000 90,000 90,000 20,000 30 units @ $2,000 DEBIT 216,000 60,000 386,000 CREDIT 216,000 11-Mar Account Receivable Sales Revenue Cost of Goods Sold Inventory Record sales of inventory on account. 400,000 30-Mar

Accounting Cs Chapter 6

2925 words - 12 pages Ocean Atlantic Co. is a merchandising business. The account balances for Ocean Atlantic Co. as of July 1, 2012 (unless otherwise indicated), are as follows: [pic] .:. During July, the last month of the fiscal year, the following transactions were completed: July 1. Paid rent for July, $4,000. 3. Purchased merchandise on account from Lingard Co., terms 2/10, n/30, FOB shipping point, $25,000. 4. Paid freight on purchase of July 3, $1,000

Related Papers

Case Study

574 words - 3 pages 7.1 Receivable turnover ratio=Net credit sales/ [(Average accounts receivable)/2] =34,529.9/ [(1726.4+1194.8)/2] =34,529.9/1460.6 =23.64 =23.64*1460.6 =$34,528.58 This means that the company collected account credit sales 23.64 times in a year. Therefore the amount collected from customers in the year 2015 will be 7.2 Ratio analysis: a.) Trade receivable turnover is an effectiveness proportion or activity proportion that


1202 words - 5 pages ACCOUNTINGS ASSIGNMENT 02 Rochana Sandaruwan ID = KARSD21 PART A Financial Ratio | How to calculate it | 2011 | 2012 | Current Ratio | Current Assets ÷ Current Liabilities | 28000 = 7 4000 | 42000 = 2.33 18000 | Quick Ratio | Quick Assets ÷ Current Liabilities | 16000 = 4 4000 | 20000 = 1.11 18000 | Account Receivable Turnover | Net

Accounting And Account Receivable Essay

1915 words - 8 pages two ways a company can account for bad debt expense: the direct write-off method and the allowance method. However, when an asset has been impaired and the loss can be reasonably estimated, the allowance method is the most appropriate to solve this situation, following the matching principle of accounting (Kieso et al., 381). The allowance method refers to an uncollectible accounts receivable process that records an estimated of bad debt expense

Contra Accounts Essay

1513 words - 7 pages account. ( asset cost account balances because their costs are not changing, but rather their economic values are being used) Their purpose is to provide useful info to users of financial statements and to assist in internal control functions. Examples: Allow users to ascertain: Accounts receivable →Allowance for doubtful debts(ADD) * level of doubtful debts (and changes therein), collection policies and