Accountsreceivablemanagementdirectlyimpactstheprofitabilityofacompany.Firstly,thepurposeoftheempiricalpartofthestudyistoanalyzeaccountsreceivableandtodemonstrateacorrelationbetweentheaccountsreceivablelevelandprofitabilityexpressedintermsofRetunonAssets(ROA)ofsamplecompanies.Secondly,theaimoftheoreticalresearchistoexplorecostandbenefitsofchangesincreditpolicy,determinetheindependentvariableswhichhaveanimpactonnetsavingsandestablisharelationshipamongtheminordertodevelopanewmathematicalmodelforcalculatingnetsavingsfollowingarevisionofcreditpolicy.Onthebasisofresearchresult,amathematicalmodelforcalculatingnetsavingsandfollowingarevisionofcreditpolicy,hasbeendevelopedandwiththismodelacompanycanconsiderdifferentcreditpoliciesaswellaschangesincreditpolicyinordertoimproveitsincomeandprofitabilityandestablishacreditpolicythatresultsinthegreatestnetprofitability.Keywords:accountsreceivable,profitability,netsavings,creditpolicy
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EKON.MISAOPRAKSADBK.GODXXII.(2013.)BR.1.(21-38)Kontu,E.:MANAGEMENTOFACCOUNTS...1.INTRODUCTION
Accountsreceivableisthemoneyowedtoacompanyasaresultofhavingsolditsproductstocustomersoncredit.Theprimarydeterminantsofthecompany'sinvestmentinaccountsreceivablearetheindustry,theleveloftotalsalesalongwiththecompany'screditandthecollectionpolicies.
Accountsreceivablemanagementincludesestablishingacreditandcollectionspolicy.
Creditpolicyconsistsoffourvariables:creditperiod,discountsgivenforearlypayment,creditstandardsandcollectionpolicy.Thethreeprimaryissuesinaccountsreceivablemanagementaretowhom
creditshouldbeextended,thetermsofthecreditandtheprocedure
thatshouldbeusedtocollectthemoney.
Themajordecisionregardingaccountsreceivableisthe
determinationoftheamountandtermsofcredittoextendtocustomers.Thetotalamountofaccountsreceivableoutstandingatanygiventimeisdeterminedbytwofactors:thevolumeofcreditsalesandtheaveragelengthoftimebetweensalesandcollections.Thecredittermsofferedhaveadirectbearingontheassociatedcostsandrevenuetobegeneratedfromreceivables.Ifcredittermsaretight,therewillbelessofaninvestmentinaccountsreceivableandfewerbaddebtlosses,buttherewillalsobelowersalesandreducedprofits.
Wehypothesizethatbyapplyingscientifically-basedaccountsreceivablemanagementandbyestablishingacreditpolicythatresults