Control after an account receivable. Use the coefficient of turnover of account receivable for the analysis of financial position of your company.

The coefficient of turnover of account receivable is determined as attitude of annual volume of realization toward the average annual volume of account receivable. This coefficient shows, as far as quickly your company collects money from clients for the put commodities or the rendered services. you also can calculate the middle amount of days from the date of shipping to the maturity of debt date, dividing 365 days into the coefficient of turnover of account receivable. If this index exceeds contract terms about the terms of payment, consequently payments act with violation of the set terms. In this case it is necessary to revise the credit policy of company. On the whole, an increase of coefficient of turnover of account receivable and diminishing of value of index of middle term of account receivable are positive signs.  Reserve on writing of bad debts.

Giving a commodity in credit, your company almost for certain will run into a situation, when clients will not pay for the put commodities or services. If your company aims fully to avoid such cases, it will have to check up the clients extraordinarily carefully, that very expensive. Moreover, in this case your company will say no many to the clients which would pay on accounts, but can not pass a test on solvency, as he is counted on sifting out of all without an exception potential defaulters. Some of your clients, getting the waiver of your company, certainly will get a commodity in credit from other suppliers, and thus the volume of your sales will grow short. Therefore, while sum of payments, entering debtor debt liquidation from the certain category of clients exceeds the prime price of commodity and other expenses on maintenance of this group of clients, your company is advantageous to supply with commodities these clients in credit, than to refuse them in a credit and to lose part of volume of sales.A rational company rather will sell a commodity in credit to such clients which will pay bills with a high degree probability, what will lose in the volume of sales, even if defaulters will meet among these clients. When your company will be able sufficiently exact to forecast credit sums which will not be liquidated, it will be able to expect necessary reserve for writing of bad debts and it is better to estimate. Able to forecast sufficiently exact size of debtor which will not be prepaid, you will be able to calculate reserve for writing of bad debts.  The calculation of bad debts which will arise up in connection with sales for certain period in the future is based on the use of method of account receivable on terms (see is a next section). Strukturirovanie of account receivable on terms.

Strukturirovanie of account receivable on terms is used for the estimation of possible non-payments. In accordance with these all client accounts are classified a method on the terms of remoteness of account receivable. Companies choose intervals for a groupment. Below resulted only one of variants that, how it is possible to analyse an account receivable on terms:

1. the term of redemption did not yet come;

2. expiration to 30 days;

3. expiration for a term from 31 day to 60 days;

4. expiration from 61 day to 180 days;

5. expiration is more than on 180 days. For every term some percent of debtor is determined, which will remain unpaid - for more protracted term this percent will be higher. As a rule, this percent is determined practical a way. An accountant must come from that reserve on writing of bad debts must be large enough, to cover all account receivable, which is overdue, for example, more than on 180 days, and certain small part of expiration in other temporal intervals.