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Companys Overview
Saint-Gobain S.A. is a French multinational corporation, founded in 1665 in Paris and headquartered on the outskirts of Paris at La Dfense and in Courbevoie. Originally a mirror manufacturer, it now also produces a variety of construction and highperformance materials. The company has its head office in Les Miroirs in La Dfense and in Courbevoie.
Objectives
Compare Actual Date of Receipt from customers with the Payment Due Date. Find out the number of days delay in receiving the payment. Compute the interest cost @12% for the number of days delayed. Find out the reason for delay in case of each invoice. Analyze the reasons.
RECIEVABLES MANAGEMENT
As we receivables management consists of two words receivables and management so receivables means the money owed to a company by a consumer for products and services purchased on credit. This is usually treated as a current asset of accounts receivables and it is known by various names, such as accounts receivable aging, days receivable, accounts receivable turnover and invoice factoring. So managing the receivables or the amount outstanding of a company is called receivables management
Increased Cash Flow Higher Credit Sales and Margin Reduced Bad Debts Loss Lower Administrative cost in the entire revenue cycle Decreased deduction and concession losses Reduced Interest Loss
CREDIT POLICY
When a sale takes place they are generally on credit basis i.e. the customer is given certain period of time to pay back the seller. Each company has its own way of providing credit to its customers. This is called as the CREDIT POLICY of the company. The credit terms of the company should be according to the competitive market situation otherwise the loss of customers could prove costly to the company
SAINT GOBAIN GLASS LTD monitors its receivables and manages them on a monthly basis. It has divided its sales team in to different groups. SAINT GOBAIN GLASS LTD monthly analyze the outstanding of each group and in that each manager. They prepare a collection plan for each manager on a monthly basis. Once the month ends the manager has to fill the actual statistics of collection done by him. Now an easy comparison is possible with the planned figures and the actual collection figures.
If the money from the debtors dont come on time the operating cycle of the company will be affected The company will not be able to pay back its Creditors on time. In case of shortage of money the company would be forced to take bank loan. This would in turn increase the fixed cost incurred by the company in the form of bank interest
OCT
NOV
DEC
JAN
FEB
MARCH
64,058,038. 57,669,710.95 61,977,111.00 51,910,679.00 57,019,524.40 55 39.16% 40.10% 52.41% 44.50% 42.94%
38,710,095. 31,725,054.40 42,939,670.98 23,159,699.12 42,074,589.84 10 23.67% 22.06% 36.31% 19.85% 31.68%
60,791,281. 54,432,944.13 13,328,100.41 41,584,006.85 17,906,532.96 89 37.17% 37.85% 11.27% 35.65% 13.48%
0%
government non govt exports
NOVEMBER10
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% pending post time on time
0%
government non govt exports
December 10
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Series 3 Series 2 Series 1
0%
government non govt exports
January11
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% pending post time on time
0%
government non govt exports
FEBRUARY11
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% pending post time on time
0%
government non govt exports
March11
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% pending post time on time
0%
government non govt exports
2,386,814.44
1,590,639.45
2,308,178.31
1,535,182.88
1,790,997.36
1,630,555.74
Observation
REASONS FOR DELAY Many a times it was observed that the debtors didnt pay company the agreed payment terms. The reasons for such a delay were found out by interacting with the respective sales managers. It was found out that reasons were such that some could be controlled and some of the reasons were out of the companys control.
CONTD
CONTROLLABLE REASONS late delivery Transportation documents not received on time Quality issues Inspections report not submitted Quantity supplied beyond tolerance level
Contd ..
UNCONTROLLABLE REASONS Cash flow problems from customers side Internal documentation problem No further sale done Software issues in the customers office
CONCLUSION
Overall after the study it has been observed that there is a lot of procedural delay in the system which has caused huge amounts of interest loss to the company. The company needs to concentrate on improving its efficiency in responding to the customer requests. There has to be a more smooth documentation process. Even though there are lot of recommendations provided for the companys receivables situation there are some constraints that come to our notice as we make an analysis which are as follows
COMPANYS LIMITATION
Due to the competitive market we cannot have strict payment terms. They have to mould according to the customers demand simply to provide customer satisfaction so as to ensure repeat orders. Many customers are associated with this company for many years, so company cannot take legal action case they delay the payments. This would only spoil their customer relationships. The company is currently not producing at its maximum capacity which is affecting its delivery schedule agreed with the customers & the customers in turn delay their payments if the cables are not delivered on time
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