Poor accounts receivable collection at Binh Minh plastics joint stock company

Abstract

Days sales outstanding of Binh Minh Plastics Joint Stock Company in the period 2013 - 2016 tends to increase and be higher than competitors and the industry which shows signs of bad working capital situation tied up in accounts receivable. In addition, there is an increase in the risk of bad debts if it can not be recovered, and increased costs associated with receivables monitoring and receivables collection. This thesis aimed at investigating practices adopted by Binh Minh Plastics in the management of accounts receivable to find out the central problem to make high days sales outstanding over the years and to recommend ways to solve this problem. Follow-up investigations revealed three possible problems: ineffective trade credit policy, poor credit collection and late payment from customer. In particular, the problem of poor credit collection is defined as the central problem, which has the great influence on the increase high days sales outstanding and can be solved in the present situation. After considering all the aspects that affect the central problem, the thesis has found the main reason caused the poor credit collection is poor credit collection policy. Besides that, the thesis finds and proposes alternatives solution and practices for effective credit collection policy to improve this issue. Binh Minh Plastics should improve a credit collection policy by setting out the procedures and practices to be used by the company to collect overdue or delinquent accounts receivable. In addition, the company should automate their electronic invoicing system to cut down on the time taken to present invoices to customers.