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Problems and countermeasures of accounts receivable management in small and medium-sized enterprises

With the fierce market competition, in order to expand their own market, small and medium-sized enterprises began to use commercial credit for credit sales, and accounts receivable came into being. Accounts receivable refers to the money that an enterprise should collect from the purchasing unit or the receiving unit for business activities such as selling goods or providing services, mainly including the price that an enterprise should collect from the relevant debtors for selling goods or providing services, as well as the packaging fees and transportation fees paid by the purchasing unit [1]. The scope of accounts receivable mainly includes: accounts receivable are creditor's rights arising from the daily purchase and sale activities of enterprises, and accounts receivable arising from non-purchase and sale activities should not be included in accounts receivable [2], such as employee arrears, interest receivable from debtors, insurance claims receivable, dividends receivable declared for distribution, etc. Should not be included in accounts receivable; Accounts receivable belong to the current assets of enterprises, excluding long-term creditor's rights, such as long-term bonds purchased; Accounts receivable are the money that enterprises should collect from customers, excluding all kinds of deposits paid by enterprises, such as bid bond and lease-in package bond. Accounts receivable will have a certain impact on the operation of enterprises, so small and medium-sized enterprises must strengthen the management of accounts receivable.

1 Causes of accounts receivable of SMEs

1. 1 market competition demand

In the increasingly fierce market competition, small and medium-sized enterprises must expand their sales and enhance their competitiveness if they want to gain a firm foothold. These factors often force enterprises to sell on credit, that is, to win customers by issuing credit, so as to achieve the purpose of expanding market share [3]. Especially in the weak market and tight monetary conditions, enterprises have to sell on credit, which is also of great significance for enterprises to sell new products and open up new markets.

1.2 Digest inventory demand

The unclear strategic positioning of small and medium-sized enterprises leads to the monotonous products of many enterprises and the lack of unique competitive advantages. In addition, the current market mostly belongs to the buyer's market, the cost price is almost transparent, and the buyer's price is suppressed, which makes some following enterprises have no room for expansion and promotion in scale and technology, and gradually lose their ability to compete with leading enterprises, resulting in smaller and smaller market share, while their production capacity is greater than their own market share, which will inevitably lead to product backlog [4]. In order to solve the backlog problem and reduce inventory risk and management costs, enterprises have to make concessions in the sales process, such as extending the trial period of products and extending the payment time, which increases the amount of accounts receivable, slows down the payment speed and further increases the burden on enterprises.

1.3 Time difference between sales and collection

The sales time and collection time of enterprise products are often inconsistent, which leads to accounts receivable. This is because it takes time to settle the payment for goods generated by economic activities, and the later the settlement time, the longer the settlement time [5]. But this kind of accounts receivable is not the real accounts receivable because of the provisions of the credit agreement between the two parties to the transaction [6], nor should it be called commercial credit because of the time difference in the settlement process.

1.4 provides useful information.

The company is willing to sell goods to customers on credit, which is tantamount to a kind of quality assurance and is passed on to the outside world as a positive signal of product quality. In fact, if the product quality is qualified, the customer will pay on time; If the quality does not meet the standard, the payment will be rejected or even returned. Compared with the additional quality guarantee, this saves the trouble of finding quality problems but refunding them.

2 problems in the management of accounts receivable and the harm of excessive accounts receivable to enterprises

2. 1 Problems before credit sale

Small and medium-sized enterprises have just started. In order to expand sales and explore the market, they will use credit sales to conduct business with customers, including discounts, such as commercial discounts and cash discounts. Commercial discount is a kind of discount sales, and cash discount is a collection policy to encourage customers to pay in advance, both of which are enterprises using commercial credit to carry out business dealings [7]. However, enterprises often have some blindness when determining customers. China's commercial credit system is not as perfect as that of developed countries, and its legal protection is relatively weak. When an enterprise decides whether to sell on credit or not and determines the commercial discount policy, it must investigate the customer's situation before implementing it. However, some enterprises pursue sales unilaterally and do business with customers directly without paying attention to their credit investigation. This will easily lead to bad debts, which is very unfavorable for an enterprise, especially for small and medium-sized enterprises that have just started. Sometimes, it will also cause the enterprise's capital chain to break, affect the capital turnover and use, easily lead to financial crisis, and the enterprise will be dragged down by accounts receivable.

2.2 Problems of enterprise performance model

In order to achieve business objectives, subjectively, Chinese enterprise managers generally only pay attention to sales, but ignore the management of accounts receivable, which makes accounts receivable easily become bad debts, increases the non-performing assets of enterprises [8], and seriously affects the normal production and operation of enterprises.

2.3 enterprise internal system is not perfect

After the occurrence of accounts receivable, enterprises should promptly collect accounts and check with each other regularly. For accounts receivable that may be irrecoverable, bad debt reserves should be withdrawn in time. However, China's small and medium-sized enterprises have small scale, few assets, simple organizational structure and more posts for one person. In this case, it is really very difficult to manage accounts receivable. If the accountant does not check the accounts with the sales department in time, it will lead to the disconnection between sales and accounting. In addition, due to the part-time job of employees, heavy tasks and low quality of personnel, insufficient attention is paid to the collection of accounts receivable. Enterprises often don't have a person who is responsible for accounts receivable to collect accounts receivable in time, which leads to more and more accounts receivable. Even if the other party's commercial credit declines and repayment is difficult, it is difficult for enterprises to find out in time, which leads to invalid collection of accounts. In addition, some customers maliciously default, and some salespeople abscond with money. This situation often happens in small enterprises, which will increase the difficulty of accounts receivable, make the aging phenomenon increasingly serious and affect the development of enterprises.

2.4 Problems in contract management

Enterprises are not strict enough when signing contracts with customers. In the process of concluding a contract, there is a lack of comprehensive and prudent grasp of the contents of the contract, and the terms and contents of the signed contract are incomplete, which has laid a hidden danger for the performance of the contract. When concluding a contract, the absence of the general terms of the contract will not affect the establishment and effectiveness of the contract, but will have a negative impact on the performance of the contract and the realization of the economic interests of the parties to the contract.

Generally speaking, the poor management of accounts receivable reduces the frequency of using funds by enterprises, which leads to the decline of enterprise benefits. Although the enterprises on the books have made profits, the funds can't be withdrawn, which leads to the profit and loss of the sales business without cash inflow, sales tax and prepaid income tax [9]. At the same time, accounts receivable are caused by credit sales, and the corresponding flow is credit sales, not all operating income. The existence of a large number of accounts receivable has inflated the sales revenue on the books, exaggerated the operating results of enterprises to a certain extent, and increased the risk cost of enterprises.

The harm of excessive accounts receivable to enterprises mainly includes: inflating enterprise assets, and accounts receivable are included in current assets in the balance sheet. Accounts receivable can not be collected, which will affect the quality of current assets and expand the assets of enterprises; Exaggerated enterprise profits, according to the provisions of China's accounting standards, income should be measured according to the accrual basis principle. When an enterprise increases its accounts receivable, it will also increase its sales revenue and operating profit [10], which seems to enhance its profitability, but this profit is only a book profit, and there is no actual cash inflow, which cannot reflect the actual profit of the enterprise; Reduce the operating capacity of enterprises, accounts receivable turnover rate = sales revenue ÷ accounts receivable. According to this formula, in the case of increasing sales revenue, due to the large base of accounts receivable, the turnover rate of accounts receivable is low, the corresponding average payment period is increased, and the operating ability is reduced; Increased the cost of the enterprise. The cost of accounts receivable includes opportunity cost, management cost and bad debt cost. Opportunity cost refers to other investment income from the loss of accounts receivable occupied by the company's funds. The more capital is occupied, the greater the opportunity cost. Management expenses refer to the expenses incurred in the management of accounts receivable, including the expenses of credit investigation, information collection and collection of accounts. Bad debt cost refers to the economic loss caused to the company due to the uncollectible accounts receivable. This cost is related to the company's credit policy and the amount of accounts receivable.

3 accounts receivable management objectives and measures and countermeasures to achieve this goal

The goal of accounts receivable management is to formulate a scientific and reasonable credit policy for accounts receivable, and predict the increased sales profit and the expected cost of adopting this policy [1 1]. Only when the increased sales profit exceeds the increased cost can this credit sales policy be implemented and implemented. At the same time, accounts receivable management also includes forecasting and judging the future sales prospects and market conditions of enterprises, as well as investigating the security of accounts receivable. If the enterprise has a good sales prospect and high security of accounts receivable, it can further relax the credit policy of collection, expand the amount of credit sales and obtain greater profits. On the contrary, it should strictly implement its credit policy, or appropriately adjust the credit degree of different customers, so as to ensure that enterprises can get the maximum benefits and minimize possible losses.

Enterprise accounts receivable management is to formulate a reasonable credit policy according to the enterprise's own operating conditions and customers' reputation. It is an important part of enterprise financial management, and it is also a policy and strategy that enterprises must formulate reasonably to achieve the purpose of accounts receivable management.

Accounts receivable management is mainly about the management of accounts receivable risks, that is, strengthening the management before, during and after the accounts receivable risks, with a view to formulating a scientific and reasonable credit policy for accounts receivable, balancing the increased sales profit of the credit policy with the expected cost of adopting the policy, and determining the credit policy for accounts receivable.

3. 1 Prior control of accounts receivable

3. 1. 1 Establish a correct profit concept

Enterprises should formulate appropriate development models according to their own products, existing markets, potential customers and their own conditions. Only in this way can enterprises establish their own competitive advantages, take the road of differentiation and stabilize the credit sales business at a safe level [12]. At the same time, we should abandon the practice of focusing only on sales growth and not on operational capacity growth, pay equal attention to sales and enterprise operation, make predictions and judgments on the future sales prospects and market conditions of enterprises, and let enterprises enter a benign growth model.

3. 1.2 Establish and improve the internal control system

Accounts receivable shall be managed by the responsibility system. All enterprises should make detailed plans according to the characteristics of the industry, make plan forms and distribute them to the responsible persons, clarify the rights and responsibilities, strengthen the responsibility awareness and risk awareness of sales personnel, and implement the collection responsibility. Strict accounts receivable write-off system, each account receivable should be clear, do a good job of aging analysis, and make provision for bad debts, strengthen internal control, and consolidate the foundation of accounts receivable management.

3. 1.3 Establish a customer review system

Small and medium-sized enterprises should conduct a detailed investigation of customers, mainly focusing on the nature, financial status and reputation of customers, and establish corresponding credit files for future reference. In the course of operation, we should also pay close attention to the operating conditions of customers. If accounts receivable cannot be collected or may not be collected, policies should be adjusted in time and measures should be taken to avoid losses.

3. 1.4 Establish a reasonable credit policy

Credit policy is the main part of accounts receivable management system. The purpose of accounts receivable credit policy is to balance the opportunity cost, management cost and bad debt loss caused by expanding sales and increasing profits. Only when the new profit is greater than or equal to the three costs to be incurred can the credit policy be implemented and applied [13]. A reasonable credit policy should combine credit standards, credit conditions and collection policies, and consider the impact of comprehensive changes of the three on sales, opportunity cost of accounts receivable, bad debt cost and collection cost. Enterprises should also prepare an aging analysis table. Looking at the actual number of days occupied by accounts receivable, enterprises can monitor their recovery by compiling an aging analysis table, so as to know how many debts have exceeded the credit period. Calculate the proportion of overtime pay. If most of them are overdue, enterprises should check their credit policies.

3.2 Control of Accounts Receivable

The process control stage is the most difficult and important stage in accounts receivable management. Mainly includes:

3.2. 1 Establishment of Credit Information System

Enterprises should establish and improve the reporting system of credit sales and strictly control the occurrence of accounts receivable. All accounts receivable, including the amount of credit sale, the time of credit sale, the seller, the period of credit sale, whether there is guarantee, the manager and the person in charge of the enterprise, shall be recorded in quadruplicate, which shall be kept by the customer, the person in charge of the enterprise, the manager and the enterprise management department respectively. The management department should check it to prevent excessive credit sales and difficulties in collecting accounts receivable.

3.6.2 Strengthen daily management and formulate necessary incentive measures.

Enterprises should pay attention to strengthening the daily management of accounts receivable in the course of operation: ① establish customer credit files, pay attention to and record customer credit at any time, and adjust credit policies accordingly. (2) Strengthen the training of enterprise sales personnel and collection personnel in economic contracts, debt collection skills, procedures and systems for enterprise sales collection, relevant economic laws and regulations [14], improve the professional quality and technical level of relevant business personnel, improve the salary policy focusing solely on sales, and improve the enthusiasm of employees. At the same time, corresponding incentive policies can be established to improve the enthusiasm of dunners.

3.2.3 Attach importance to contract management

In addition to cash income, enterprises must sign supply contracts. After the sales department receives the Credit Sales Declaration Form signed by the credit department and the legal representative of the enterprise, it will sign the sales contract according to the examination and approval opinions and in agreement with the customers. The elements of the sales contract must be complete and conform to the national laws and regulations, especially the payment form, account period and specific liability for breach of contract of deferred payment should be clear and accurate, and it is best to adopt a unified contract model. In addition, the sales department will also copy several contracts, which will be submitted to the credit management department and the finance department respectively after being checked with the originals by relevant departments or personnel to help them supervise and warn the implementation, tracking and inspection of sales contracts.

3.3 Post-event control of accounts receivable

This stage is the summary stage after accounts receivable collection, that is, according to a cycle of accounts receivable, enterprises extract information related to the establishment of enterprise credit file database or feedback information related to enterprise accounts receivable management system to improve the management of accounts receivable. The main work at this stage includes:

3.3. 1 accounts receivable tracking management

Enterprises should track the released accounts receivable in real time, keep in touch with customers, remind customers of the time to collect accounts in time, and pay attention to the quality of services or products provided by enterprises at any time. Problems should be handled at any time, maintain good relations with customers, improve the recovery rate of accounts receivable, identify the expected risks of accounts receivable, and reduce the possible losses of enterprises.

3.3.2 Implement strict responsibility system for accounts receivable.

Refine the collection of accounts receivable into personal responsibility, link the collection of accounts receivable with personal work performance, give a certain warning to the person in charge of overdue accounts receivable, and reward the person in charge of accounts receivable recovered in advance.

3.3.3 Update the customer's credit file.

Pay attention to the customer's financial status, reputation and other information at any time, and update the customer's credit file so as to carry out the next round of credit sales business. For customers with good business conditions and timely repayment, a more relaxed credit policy can be adopted afterwards. For customers whose repayment is not timely and their business conditions are declining, we should carefully consider the next credit policy. If it is only a temporary business mistake, the previous credit policy can still be used immediately. If the business situation is difficult to develop in a good direction for a while, we can consider switching to a stricter credit policy or even canceling the customer's credit sales authority.

3.3.4 Formulate reasonable collection procedures.

The procedures for collection of accounts are generally: letter notification, telegram or telephone fax collection, personal interview and legal recourse. Which method to choose should be analyzed according to the specific situation. In any case, the collection should be limited to the scope permitted by law, and threats and illegal acts should never be taken [15]. In addition to relying on their own strength, enterprises can also entrust agencies, but they should be careful when choosing agencies and choose companies with good reputation.

3.3.5 Collection of accounts receivable

The enterprise manager shall submit the due accounts receivable to accounts receivable collection Group for dunning. The organization and management of the collection team should pay attention to the following aspects: first, the former fund manager, department head or unit head should participate in the collection team as a natural person in charge of accounts receivable and participate in the work under the deployment of the person in charge of the collection team; Second, the members of the collection team decompose and implement the clean recycling objectives and tasks according to the division of labor of customers; Third, strict assessment, clear rewards and punishments, and the recovery of long-term arrears and the control of bad debts should be included in the performance appraisal to mobilize the enthusiasm and effect of dunning.

To sum up, with the further deepening of global economic integration and the increasingly fierce market competition, it is generally impossible for small and medium-sized enterprises not to be eliminated and not to have accounts receivable. We can't deny the benefits that credit sales can bring to enterprises, but because of many unfavorable factors of accounts receivable management and the financial qualifications of small and medium-sized enterprises, we can't believe that credit sales are a panacea to solve enterprise management. Therefore, it is particularly important to find the best combination point among the advantages and disadvantages brought by accounts receivable and realize the management goal of accounts receivable in enterprises. First of all, managers of enterprises should pay enough attention to their thoughts. In addition, we should also effectively control accounts receivable, minimize the risks of accounts receivable, handle and solve the problem of unity of opposites in accounts receivable management, and strive to achieve the goal of enterprise accounts receivable management.