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December 2021 (published: 08.12.2021)
Number 4(47)
Home > Issue > Improving the Process of Managing Accounts Receivable of Small Businesses in the Context of Digital Transformation (on the example of LLC «TH “LOWRY”»)
Alekseeva L.D. , Bombin A.Yu.
This article discusses the possibility of forming an effective strategy aimed at improving the quality of the process of managing accounts receivable of a commercial enterprise. The authors propose several solutions to reduce the formation of uncontrolled amounts of client debt, in cases of using factoring tools and a counterparty evaluation system. The proposals under consideration were developed and implemented into the activities of a commercial enterprise based on a comprehensive financial analysis of LLC «TH “LOWRY”». The purpose of the work is to identify scientifically sound theoretical provisions and develop a strategy aimed at improving the management process of accounts receivable of a commercial enterprise in the field of small and medium-sized businesses. Based on the goal, the authors solved the following tasks: determining the causal relationship in the issue of causes and conditions affecting the formation of receivables. Formation of a clear formulation of a detailed methodology for assessing the integrity and solvency of counterparties. Development of a specific strategy that improves the quality of the process of managing the current assets of a commercial enterprise. Evaluation of the economic efficiency of the developed strategy and proposed measures by using modeling methods and practical experiment directly in the company's activities. Additionally, the article discusses the principles and methods of accounts receivable management, as well as practical recommendations based on the methods of artificial and practical modeling of the situation. The authors used general methods of various aspects of scientific cognition. As a result of the study, having considered the option of post-payment for an enterprise as a payment that is made after the provision of a service or the purchase of goods and applying the developed recommendations to LLC «TH “LOWRY”» on the basis of its reporting documentation for 2018, the authors concluded that this enterprise needs to refuse 69% of its customers in the post-payment mode of payments for purchased goods and secure this right only for 31% of the most solvent counterparties who do not allow long-term payment of their obligations. It can be assumed that in the initial period of the company's activity, these proposals may lead to a reduction in sales revenue in the amount of 27%, since about 69% of counterparties who will be refused post-payment mode, as insolvent payers, determine the company's revenue in the amount of 27%. However, the proposed measures aimed at improving the accounts receivable management process provide an opportunity for the company to increase the turnover ratio of goods by 1.25 turnover, which may lead to a decrease in the turnover period by 229 days. As a result, the study of this issue led to the conclusion that for the period from March 24 to May 12, 2020, the company, using the developed proposals of the authors, did not allow an increase in the number of accounts receivable in the amount of more than 10 million rubles. In addition, due to the comprehensive assessment of counterparties with the subsequent use of factoring tools and pre-trial penalties, the company recovered more than 45% of the debt from debtors.
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Keywords: accounts receivable, factoring, business audit, business responsibility, credit limit, debtor, turnover of working capital.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 338.27, 658.15
Improving the Process of Managing Accounts Receivable of Small Businesses in the Context of Digital Transformation (on the example of LLC «TH “LOWRY”»)
This article discusses the possibility of forming an effective strategy aimed at improving the quality of the process of managing accounts receivable of a commercial enterprise. The authors propose several solutions to reduce the formation of uncontrolled amounts of client debt, in cases of using factoring tools and a counterparty evaluation system. The proposals under consideration were developed and implemented into the activities of a commercial enterprise based on a comprehensive financial analysis of LLC «TH “LOWRY”». The purpose of the work is to identify scientifically sound theoretical provisions and develop a strategy aimed at improving the management process of accounts receivable of a commercial enterprise in the field of small and medium-sized businesses. Based on the goal, the authors solved the following tasks: determining the causal relationship in the issue of causes and conditions affecting the formation of receivables. Formation of a clear formulation of a detailed methodology for assessing the integrity and solvency of counterparties. Development of a specific strategy that improves the quality of the process of managing the current assets of a commercial enterprise. Evaluation of the economic efficiency of the developed strategy and proposed measures by using modeling methods and practical experiment directly in the company's activities. Additionally, the article discusses the principles and methods of accounts receivable management, as well as practical recommendations based on the methods of artificial and practical modeling of the situation. The authors used general methods of various aspects of scientific cognition. As a result of the study, having considered the option of post-payment for an enterprise as a payment that is made after the provision of a service or the purchase of goods and applying the developed recommendations to LLC «TH “LOWRY”» on the basis of its reporting documentation for 2018, the authors concluded that this enterprise needs to refuse 69% of its customers in the post-payment mode of payments for purchased goods and secure this right only for 31% of the most solvent counterparties who do not allow long-term payment of their obligations. It can be assumed that in the initial period of the company's activity, these proposals may lead to a reduction in sales revenue in the amount of 27%, since about 69% of counterparties who will be refused post-payment mode, as insolvent payers, determine the company's revenue in the amount of 27%. However, the proposed measures aimed at improving the accounts receivable management process provide an opportunity for the company to increase the turnover ratio of goods by 1.25 turnover, which may lead to a decrease in the turnover period by 229 days. As a result, the study of this issue led to the conclusion that for the period from March 24 to May 12, 2020, the company, using the developed proposals of the authors, did not allow an increase in the number of accounts receivable in the amount of more than 10 million rubles. In addition, due to the comprehensive assessment of counterparties with the subsequent use of factoring tools and pre-trial penalties, the company recovered more than 45% of the debt from debtors.
Read the full article
Keywords: accounts receivable, factoring, business audit, business responsibility, credit limit, debtor, turnover of working capital.
DOI 10.17586/2310-1172-2021-14-4-3-15