Sri Lanka Ports Authority also sales focused semi government organization.

When
compared with other organizations the Sri Lanka Ports Authority provides only
services to its customers relates to navigation activities such as harbour, pilotage, and
tug service, port infrastructure, stevedoring and wharf function and other services like
supply of fresh water to ship, railway facilities, fire fighting etc.

One organization sells raw materials for a product of any other organization and some
used others finish product as there material. So the performance of these industries
can be identified as a network. Also this creates a huge competition among the
business. Every organization struggles to increase there sales even under severe
competitive situation using various strategies.

Sales can be done on cash or credit basis. Transactions on cash basis do not make any
risk to the company. But it is stimuli for sales volume increment. Credit sales creates
risk for the organization and as a consequence increase bad debts, increase liquidity
problem and ultimately affect to the survival of the organization Credit sale should be
done in a systematic way so as to avoid these threats. Credit Sales mean “made to
customers during the current period for which cash was not paid at the time of sale,
leading to an account receivable.” When organization engaged in credit sales it should
undergo through systematic credit control under credit policy. Elements of credit
policy consider before credit sales by the creditor. Credit control
(www.bizhelp24.com) has been defined as utilization of credit policy to receive,
recover, maintain and most importantly control credit sales.

Already 300 of shipping agents who are considered as the customers have been
registered at Sri Lanka Ports Authority in order to get there service. But only around
150 are active out of them. If at least one transaction operated per month, that agent
can be considered as active agent. SLPA maintains ledger accounts for each customer
and charges are made under navigation dues and stevedoring charges. The agent
should pay relevant charges in advance prior to obtain SLAP’s service. Excess
advance payment brought forward in relevant agent’s account and if there is any
deficit it remains as debit balance in the account which should pay within 48 hours, 14
days, 28 days and 30 days which vary according to the nature of the agents. But most
of the payments were beyond the credit periods.

1
Research problem

Sri Lanka Ports Authority engages in international business. Transactions of the

SLPA are done in large scale as the credit transactions. Debtors are in different
categories according to their credit period as 30, 28, 14 and 2 days credit period. After
issue the bill relevant amount should pay within the credit period which each debtor
belongs. But it takes more days to settle the bill than permitted, some times more than
a month’s time. This late payment can be demonstrated as follows.

Late payment of each category

Credit
1-5 6-10 11-15 16-20 21-25 26-30 30 <
period
2 days 45,078 254,097 287,370 323,145 13,614 694,046 2,856,223

14 days 98,181,224 47,939,150 22,014,934 69,522,688 45,623,754 49,301,989 28,775,720

28 days 10,908,776 6,359,233 5,693,981 3,381,509 690,079 494,818 832,699

30 days 6,909,747 11,528,512 19,338,861 66,732,853 37,681,629 49,064,382 28,534,295

Source: survey data 2010

It indicates that millions of values had delayed to pay by the agents. If debtors made
payments as due, it should be re-invested for higher interest for profits to the SLPA.
SLPA charge a penalty for late payments but no condition on time period to pay that
penalty. So its clear many problems take place due to the delays of payment by
debtors.

2
Broad objective
The broad objective of this research study is to analyze the delayed payments after
due date.

Specific objectives
• To identify the shipping agents who get more time to pay bills than due
period.
• To determine the penalty for late payments of each agent under each category.

Research Question
• How many days are delayed the payment of bills by shipping agents on due
date?
• How many penalties had paid by each agent under each category?
• How penalties are given on delayed payments