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8-Reporting and Analyzing Receivables

8-Reporting and Analyzing Receivables

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Published by tibip12345
accounting, Wiley
accounting, Wiley

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Published by: tibip12345 on Oct 17, 2009
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12/27/2012

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Introduction
chapter 8
Reporting and AnalyzingReceivables
Accounting Matters!
Keeping Receivables Healthy
For any large company, managing receivables carefully is crucial to profitability. As Maria Cardosoknows, keeping tabs on the timely receipt of payments from hundreds of credit accounts can be a tough job.Ms. Cardoso is supervisor of credit and collections at Mississauga-based Wyeth Consumer Healthcare, aCanadian subsidiary of global pharmaceutical company Wyeth. Wyeth distributes top-selling, name-brand, over-the-counter health-care products.The company's sales terms are 1/15, n/30 (1% discount if paid within 15 days). Sometimes, if thecustomer pays several invoices—some under 15 days, some over—with one cheque, Ms. Cardoso mightallow the discount for all of them. That's because smaller companies often write cheques only once aweek, or even once a month. “We always consider each case individually,” she says.The process starts with a decision to grant a customer an account in the first place. A sales rep gives thecustomer a credit application, which Ms. Cardoso reviews. In addition to checking three goodreferences, she screens prospective accounts with a credit agency. Once accepted, they are assigned acredit limit based on their size and history.They are then supervised closely. “We get an aging report every morning that shows exactly what eachcustomer owes and what category the account falls into—current, 1–30 days, 31–60 days, 61–90, andover 90,” says Ms. Cardoso. “Fortunately, our receivables are always at 95% current or better.” When anaccount is overdue, there's usually an explanation. Ms. Cardoso tends to call as soon as a payment islate. “If the invoice has gone missing, for example, you want to find out right away,” she says.
http://edugen.wiley.com/edugen/courses/crs1562/pc/c08/content/kimmel6792c08_8_1.xform?course=crs1562&id=ref (1 of 3)11/03/2008 8:19:16 PM
 
Introduction
The challenge with bigger customers is trying to reconcile accounts for short payments. WyethConsumer Healthcare often gives its customers vendor allowances for displaying its productsprominently. “What occasionally happens is they just take the rebates off their payment,” she says. “Itwould be a lot better if they waited for us to actually give it to them!” And, from time to time, paymentsare simply late.Although the company's bad debts are minimal, Ms. Cardoso's boss, Terry Norton, records an estimatefor them every year, based on a percentage of receivables and their current aging history. He and Ms.Cardoso know that keeping receivables healthy and customers happy are both good for business.
The Navigator
http://edugen.wiley.com/edugen/courses/crs1562/pc/c08/content/kimmel6792c08_8_1.xform?course=crs1562&id=ref (2 of 3)11/03/2008 8:19:16 PM
 
Introduction
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Feature Story 
Scan
Study Objectives 
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Chapter Preview 
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Before You Go On 
Work
Using the Decision Toolkit 
Review
Summary of Study Objectives 
Review the
Decision Toolkit—ASummary 
Work
Demonstration Problem 
Answer
Self-Study Questions 
Complete assignments
 
Copyright © 2008 John Wiley & Sons Canada, Ltd. All rights reserved.
http://edugen.wiley.com/edugen/courses/crs1562/pc/c08/content/kimmel6792c08_8_1.xform?course=crs1562&id=ref (3 of 3)11/03/2008 8:19:16 PM

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