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    Collection Program - Receivables Management

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    shalini swaraj
    This document compares the costs and benefits of three different collection programs - the present program and programs A and B. It details sales revenue, accounts receivables, cost of funds invested, bad debt losses, collection expenses, benefits of the programs, and incremental net benefit. It finds that program A provides the highest incremental net benefit of $83,500 compared to $59,000 for program B, so it recommends adopting program A.

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    Collection Program - Receivables Management

    Uploaded by

    shalini swaraj
    14 views2 pages
    This document compares the costs and benefits of three different collection programs - the present program and programs A and B. It details sales revenue, accounts receivables, cost of funds invested, bad debt losses, collection expenses, benefits of the programs, and incremental net benefit. It finds that program A provides the highest incremental net benefit of $83,500 compared to $59,000 for program B, so it recommends adopting program A.

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    collection program- receivables management

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    This document compares the costs and benefits of three different collection programs - the present program and programs A and B. It details sales revenue, accounts receivables, cost of funds invested, bad debt losses, collection expenses, benefits of the programs, and incremental net benefit. It finds that program A provides the highest incremental net benefit of $83,500 compared to $59,000 for program B, so it recommends adopting program A.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    14 views2 pages

    Collection Program - Receivables Management

    Uploaded by

    shalini swaraj
    This document compares the costs and benefits of three different collection programs - the present program and programs A and B. It details sales revenue, accounts receivables, cost of funds invested, bad debt losses, collection expenses, benefits of the programs, and incremental net benefit. It finds that program A provides the highest incremental net benefit of $83,500 compared to $59,000 for program B, so it recommends adopting program A.

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    of 2

    Relaxation of Collection Effort:

    Incremental Costs and Benefits


    Details Formulals
    Sales revenue
    Average collection period in days
    sales*(average
    Accounts receivables collection period/360)
    cost of funds invested in the receivables 15% * amout of rec
    saving in the cost of funds invested in receivables

    Bad Debt losses on sales


    amount of bad debts % of bad debt loss*sales
    reduction in bad debt loss from current state

    Benefits of new collection programms due


    to cost saving and reduction in bad debts
    losses compared to present program row 11+row 15

    Collection expenses
    incremental expenses due to new collection program

    incremental net benefit

    net incremental benefit from program A is 83,500 an


    Hence we recommend program A for the company
    ation of Collection Effort:
    mental Costs and Benefits
    Present Program Program A Program B
    10,800,000 10,800,000 10,800,000
    60 45 30

    ₹ 1,800,000.0 1350000 900000


    ₹ 270,000.0 202500 135000
    ₹ 67,500.0 ₹ 135,000.0

    6% 4% 3%
    648000 432000 324000
    216000 324000

    ₹ 283,500.0 ₹ 459,000.0

    ₹ 100,000.00 ₹ 300,000.00 ₹ 500,000.00


    ₹ 200,000.00 ₹ 400,000.00

    ₹ 83,500.00 ₹ 59,000.00

    l benefit from program A is 83,500 and from program B is 59000


    mmend program A for the company

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