ANALYSIS OF ACCOUNTS

RECEIVABLE MANAGEMENT OF
HYATT

GUIDED BY: SUBMITTED BY:

DR. GAZALA YASMIN ASHRAF KANISHKA CHHABRIA
INTRODUCTION:

 It refers to the sum of all money owned to the firm by customers arising from the
sales of goods or services in the ordinary course of business.
 Accounts receivable is the team or group within a company that uphold the
policies and practices of managing sales offered on credit set by that
company. For instance, a company that sells electronics may offer financing or
a line of credit on their higher priced products like televisions or sound systems.
The group in that company who establishes the credit and bills the customer
every month would be the accounts receivable team.
 They oversee the credit process from start to finish as well as create and update
rules and regulations along the way. The overseeing of these rules and
regulations set forth by the company is called accounts receivable
management.
 For law firms that offer sales on credit, a knowledgeable and hardworking
accounts receivable team is integral, and to have one put in place long before
any credit is used will not only save your firm money but headaches as well.
WHY CREDIT SALES IS ADOPTED BY A
COMPANY:
 Most of the time, offering sales on credit is beneficial for both parties
involved. Not only does the customer get the legal services they
need right then and there, but they get to pay off the services in
small, manageable monthly payments.
 The client also gets to build credit, making it even easier for them to
open new lines of credit in the future. The firm that offers the line of
credit also benefits as they get to sell their legal services as well as
charge a small amount of interest on the provided service, making
the firm more money in the process.
OBJECTIVES OF THE STUDY:

 Monitoring: The A/R report is an important management tool

that allows the organization to monitor key performance indicators
(KPIs) in order to evaluate processes and activities, make important
business decisions, and improve financial performance.
 Analyzing: The A/R report allows management to analyze the
performance of the organization in order to identify potential
problems that arise, identify the root cause of problems that exist,
and determine the effectiveness of current processes and
procedures.
 Managing: The A/R report provides the information necessary to
effectively manage the employees and processes with clear focus
and direction to reach organizational objectives and goals.
IMPORTANCE OF ACCOUNTS
RECEIVABLE:
 INCREASE IN SALES
 MAINTAIN LIQUIDITY
 MEETING WITH THE COMPETITION
PROCESS OF AR:
 PUTTING A CREDIT PRACTISE AT PLACE
 GENERATING INVOICES
 KEEPING TRACK OF PAYMENTS RECEIVED AND PAYMENTS YET TO BE RECEIVED
 KEEPING ACCOUNTS FOR BILLS RECEIVABLE
CONCLUSION:
 In conclusion, “receivables management is the diligent tracking and methodical
practice of following up on and collecting payments” (Wertz, n.d). A company can
properly manage its accounts receivable if it knows what the accounts receivable
turnover rate is and the average collection period.
 By using this information, a company can evaluate its credit policy and make
changes to ensure a higher rate of accounts receivable turnover and increase its
cash flow.
 The successful management of accounts receivables encompasses all of the
above to not only make sure you are extending credit appropriately to customers
who are “credit-worthy” (as deemed by the rating sources and scoring models
used) but also that the terms ensure that you will have an adequate cash flow for
the day-to-day operations of your business.

 ACCOUNTS RECEIVABLE TURNOVER RATE =

(NET SALES/AVERAGE ACCOUNTS RECEIVABLE)

 AVERAGE COLLECTION PERIOD=

(365/AVERAGE RECEIVABLE TURNOVER RATIO)
THANK YOU