Ineffective accounts receivable management at Vietnam Airport Ground Service Company Limited

Abstract

The study has approached the problem of Vietnam Airport Ground Services Co., Ltd. starting with a situation where the company has experienced a decrease in working capital in the last 3 years. This greatly affects the cash flow and performance of company because of the negative impact it has. Through secondary data provided by the company, interviews with relevant people in the company and searching for related theories, the author realized that there were a number of factors leading to this situation, of which the main problem is identified as the inefficiency in receivables management. The receivables of company mainly comes from credit sales. However, customers' payment periods for credits tend to be extended. Going further to find out the causes of the problem, the three most prominent ones are the ineffective credit policy, weak credit assessment ability and poor communication with customer. After analysis, the main cause was determined by the company's lack of effective credit policies to control credit issuance and monitor customer payments. To address this cause, the best solution is to issue a strict set of credit standards. With this solution, the company hopes to tighten the conditions to apply credit to customers, thereby reducing the working capital needed to finance accounts receivable, reduce costs to maintain accounts receivable, and especially reducing the risk of bad debt. The global economy has many fluctuations, especially in the coming years, after the Coronavirus pandemic occurred in the early months of 2020 and showed no signs of stopping until now. Airlines - customers of VIAGS - suffered heavy losses unprecedented in history. Within the last 2 months, many airlines in the world have fallen into financial exhaustion and even went bankrupt. And so, for VIAGS, the risk of bad debt from customers is likely to increase and be unpredictable in the near future. Faced with these difficulties, tightening credit standards is expected to help the company maintain safety and stability.