We define the receivable management as the aspect of a firm's current assets management, which is concerned with determining optimum credit policy associated to a firm, such that the benefit from extension of credit is greater than the cost of maintaining investment in accounts receivables.// The specific purposes of receivable management are as follows:
1. To evaluate the creditworthiness of customers before granting or extending the credit./
2. To minimize the cost of investment in receivables./
3. To minimize the possible bad debt losses./
4. To formulate the credit terms in such a way that results into maximization of sales revenue and still maintaining minimum investment in receivables./
5. To minimize the cost of running credit and collection department./
6. To maintain a tradeoff between costs and benefits associated to credit policy.
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