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Unit 10: Receivable Management
As a result, the Maryland clinic was able to: Notes
1. Witness that the average AR days were brought down from 34 to 23 days within
6 months
2. Witness that the collection percentage increased from 53% to 61% within 6 months
3. Have significant improvement in the cash flow as a result of increase in collection
ratios
4. Concentrate on patient care and see more patients, with the availability of more
time, and a clutter free office
5. Decrease reliance on employees and eliminate fluctuations associated with backlogged
claims and employee turnover
6. Increase operating efficiency and reduce administrative costs
Questions
1. What do you think as the best step to have been taken by O2I in order to make the
project successful?
2. Do you think that outsourcing the accounts receivable management is better than
doing it by oneself? Why/ why not?
Source: www.outsource2india.com
Self Assessment
Fill in the blanks:
8. Trade credit creates a ........................... proposition for both – buyers and suppliers.
9. An ........................... is the money owed to a company by a consumer for products and
services purchased on credit.
10. Accounts receivable management’s main goal is to take care of all the ........................... and
to record ...........................
11. A factor evaluates the customer’s ...........................
10.4 Collections from Receivables
Just evaluation of individual accounts does not help in efficient accounts receivables management
without continuous monitoring and control of receivables. In other words, success of collection
effort depends on monitoring and controlling receivables. Then how to monitor and control
receivables? There are traditional techniques available for monitoring accounts receivables.
They are:
1. Receivables turnover,
2. Average Collection period,
3. Aging Schedule, and
4. Collection Matrix.
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