Question

How can management practices speed receivables collection? Which practices slow this collection? How have recent changes in the banking industry influenced the process?

Answer 1

Anyone available to help?

Answer 2

I would say that in every big company 'ABC' , would have its accepted accounting practices, that when done correctly makes recievable income flow in as normal as it should , how they manage theire financing is all entirely based on the company's main accountant. but which ever or whoever it is that runs it, if its done right and ""everyting runs smooth"" more and more companies follow that companys strategie. like a chain reaction.. (GAAP)

Answer 3

There are several ways in which a company can speed receivables collection. One of which is to decrease the amount of days the buyer has to pay for the item. Another way is to offer discount terms such as 2/10, n/30. This means that you will give the buyer a 2% discount if they pay in the first 10 days, or pay in full (n) in 30 days. Practices that slow this collection would be to increase the # of days the buyer has to pay. The banking industry has influenced how quickly receivables are collected by offering direct deposits. Instead of the buyer sending you a check, and then you taking the check to the bank to get cashed, the buyer can send the bank the check, and the bank will deposit the money into your account automatically

Answer 4

good read for someone who doesn't study finance!

Answer 5

Speeding up accounts receivable:

The major type of accelerating accounts receivable is to sell the entire accounts
receivable to a SPV or VIE , that way the entire accounts receivable is taken out of the
balance sheet of the company.Prior Enron the US GAAP was lenient on such off balance sheet
practices but after the fall of Enron US GAAP has made such practices difficult.

Eg: A credit card company can sell its credit card receivables to a SPV and in its
balance sheet the accounts receivable will be zero.

To my knowledge Enron had a big influence on these practices not sure about banking.

Answer 6

for first two question Jboogie had a good answer ...for last 1
Banking services offer variety of “cash management services” to business houses for speed collection of Check which accelerate the process of collection & reduce the days of receivables for business as the collection time taken by bank are curtailed & banks usually have a tie ups with other banks across regions .