3M's Credit Management Techniques: Impact on Cash Movements

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A study on
“The Analysis of Credit Management techniques adopted by 3M and its impact on Cash Movements” At
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Submitted to
BANGALORE UNIVERSITY
In Partial Fulfillment for the award of
The Master of Business Administration Degree

By:

TAYABA SHIREEN. A
Reg. No: 03ACCM6056

AL-AMEEN INSTITUTE OF MANAGEMENT STUDIES
(Affiliated to Bangalore University, Bangalore – 560027)

CONTENTS

CHAPTER- 1INTRODUCTION

• Accounts receivables policy formulation • Credit Policy
• Credit Analysis
• Credit Costs

CHAPTER- 2RESEARCH DESIGN

• Statement of problem
• Title of the Project
• Objectives of the Study
• Research Methodology
• Sources of Data
• Tools for Data Collection
• Scope of the study
• Limitations

CHAPTER- 3COMPANY PROFILE

• History & Corporate Milestones • Strengths
• The organization
• Goals
• Performance Initiative
• Vision

CHAPTER- 4ANALYSIS & INTERPRETATION

• Techniques of Payment & Collection • Credit Terms
• Credit Policy
• Control of Accounts Receivables

CHAPTER- 5FINDINGS

CHAPTER- 6SUGGESTIONS

CHAPTER- 7BIBLIOGRAPHY

ANNEXURES

INTRODUCTION TO RECEIVABLES MANAGEMENT

An accounts receivable is generated when an enterprise, having granted credit, accepts, in lieu of cash, a written or implied promise to pay in the future for delivery of its goods or services. In today’s business environment, competitive pressures, customer preferences and promotional selling leads the management of most enterprises to offer credit.

Accounts receivables often constitute a significant portion of assets. Controlling the accounts receivables process demands the development of policies that are compatible with an enterprises profits, liquidity and market share. Since the accounts receivables policy has a broad impact, it must be managed carefully and assessed frequently.

Accounts receivables policy development is subject to internal and external business constraints and requires careful evaluation of the policies potential impact on sales volume, cash management objectives and procedures, direct and indirect cost of receivables management and customer relations.

Once an account receivables policy is implemented, it should be reassessed at least annually, since policy changes could be required to adjust for changing internal and external conditions, such as changing business objectives, varying competitive industry standards, fluctuating interest and foreign exchange rates, inflation, rapidly increasing credit volume, technological advances and globe trade pattern trends.

Receivable is a permanent investment and is an ever-rolling account. The finance manager has to determine the level of this account suitable so that there will be an easy flow of working capital. The management should see that debtors turn fast. If the debtors’ turnover velocity is high then the firm can minimize borrowings for working capital. Accounts receivable management is a decision making process, which takes into account the creation of debtors, and minimizing the cost of borrowings of working capital due to locking of funds in account receivables.

Impact of receivables management on business
Financial Impact:
• Improved return on receivables.
• Increased cash flow.
• Generates investment...
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