Credit control policy and receivable management : Case tudy of Binh Minh garment joint stock company
Abstract
The case study company of this thesis is Binh Minh Garment Joint Stock
Company (hereby abbreviated as BIGAMEX). Bigamex is a garment manufactured
exporting company under The Vietnam National Textile and Garment Group. The
company established in 1975 and since then has maintained to be under the management
of Vietnam National Enterprises. Its main products are exported clothes and garment
products trading on both domestic and foreign markets. Since the nature of business in
which Bigamex operates dealing mainly with import and export process, the Company
needs to manage its relationship with customers as well as its accounts receivables
whether or not affect the company’s performance.
Accounts receivable management is an essential component of a successful
business. Accounts receivable management directly impacts the profitability of the
Company. The accounts receivables are the Company’s income, and they should be kept
track of to determine how to increase returns - to learn where Company’s money is
coming from, who is its best customer. Without efficient accounts receivables
management, Company could be suffering from unnecessary over-increasing in accounts
receivables, which are further one of the severe reasons leading to illiquidity or worse -
insolvency of the business. The Company not only should manage its accounts
receivables on timely and effective basis, but also focus on how to predict possible
downward or upward trend in the future.
The research is dedicated to focus on analyzing components of internal credit
control which is the main controlling tool of the Company’s accounts receivables
management. In addition, evaluate the results of an overview on financial ratios which
these credit ratings were based, to establish a qualitative approach in which analyzing
current credit control position of the Company will highlight possible material defects in
receivables management and solutions recommended.