FLOAT ANALYSIS

BY HARDIK THAKKAR

RECEIVABLES MANAGEMENT
Any fool can lend money, but it takes a lot of skill to get it back

INTRODUCTION
 What are receivables?

Receivables are sales made on credit basis.

 Why do we need receivables? Cash Operating Cycle Receivables

To increase total sales To increase profits To meet increasing Competition

 Understanding Receivables

As a part of the operating cycle



Inventory

Time lag between sales and receivables creates need for working capital

FLOAT ANALYSIS
 Float Analysis is an effective tool used for

Receivables control.
 It implies analysis of the period that affects

cash as it moves through the different phases in the collection process.

FLOAT ANALYSIS
ACTIVITIES
1.Sales 2.Sending invoice to customers 3.Receiving invoice to customer 4.Debtor sends cheque 5.Receiving of cheque by the company s branch/operating office 6.Cheque deposited into bank 7.Cash available to branch/operating office 8.Cash remitted to Head Office(H.O) 9.Remittance received and credited at HO bank

FLOATS 1.Billing float 2.Mailing float 3.Net credit float 4.Mailing float(2) 5.Cheque processing 6.Bank float(1) 7.Remittance float 8.Bank float(2)