Entities credit policy assessment

Correct organization of payment operations ensures the stability of funds turnover of business entity, the strengthening of payment discipline and improvement of its financial condition. This article considers options of measurement of receivables and ways to reduce the negative effects of late payment from customers. Receivables management involves monitoring of the funds turnover in the payments. Acceleration of turnover dynamics through the several periods of time is a positive trend. The selection of potential buyers and defining terms of payment for goods provided in contracts could be an important key measure for payment deadlines reduction. The selection is carried through informal criteria: compliance with a payment discipline in the past, projected financial capabilities of buyer to pay the requested volume of goods, the level of the current paying capacity, level of financial stability, economic and financial conditions of the seller (overstocking, level of need in cash, etc.). The effect achieved by accelerating the turnover is reflected by an output increase without additional attraction of financial resources. In addition, due to the acceleration of a capital turnover there will be a profit increase. If the production and sale of products are resulted in loss-making, then the acceleration turnover funds leads to the deterioration of financial results and “eating away” of the capital. Thus, we should strive not only to accelerate the capital turnover at all stages of circulation, but also to provide its maximum potential, which is reflected in the increase of profit amount. Increasing the return of capital achieved by rational use of all resources, preventing their overspending, losses at all stages of the circulation. As a result, capital will return to its initial state to a greater amount, including a profit. The efficiency of capital is characterized by its profitability.