A

PROJECT REPORT
ON
STUDY OF
“RECEIVABLE MANAGEMENT
&
CREDIT ANALYSIS”

PIRAMAL HEALTHCARE LTD.

Vitamin A & Fine Chemicals Division,
Thane

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 Submitted in partial fulfillment of Degree of
MASTER OF BUSINESS ADMINISTRATION
2007 – 2009

Guided By,
Mr. Mahesh Sane (G.M. (Finance)

Submitted by,
GANESH B.PATIL.
M.B.A.-I (Finance).
GLOBAL BUSSINESS SCHOOL,JALGAON.

ACKNOWLEDGEMENT
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 I wish to express my heartiest thanks to management of PHL for
providing me the opportunity to under go training in the esteemed organization.
Under such a nice environment, systematic work approach and target oriented
task management of this division provided me with the much-desired training
experience needed for future manager.

It is my pleasure to thank Shri. Rajesh Rane, Manager of HR &

Administration to whom I owe a lot for giving me an opportunity to do my
training in this organization; I also owe a special thanks to Mr. Mahesh sane,
General manager of Finance Dept, VFCD,PHL,Thane,for allowing me to do
project under their guidance.

The project would not be a success without the constant and valuable
guidance of Ms. Yogesh Pawar, Mr. Dhawal Kulkarni & Mr. Vikram for the
project, who is rendering all sorts of help as and when required.

Last but not least I wish to regard my sincere thanks to all the
employees of PHL (Finance and Marketing dept. in particular) who directly or
indirectly helped me in completion of project.

Thank you.

GANESH B. PATIL.

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 DECLARATION

I wish to state that the work embodied in this project titled

“STUDY OF RECEIVABLE MANAGEMENT & CREDIT ANALYSIS”
of Piramal Healthcare Ltd. VFCD, Balkum, Thane. forms my own
contribution to management.

Wherever references have been made to intellectual properties

of any individual/ institution/ Government/ Private/ Public Bodies/
Universities, research paper, text books, reference books, research
monographs, archives of newspapers, corporate, individuals,
business/Government& any other source of intellectual properties
viz., speeches, quotations, conference proceedings, extracts from
website, working papers, seminal work et al the have been clearly
indicated, duly acknowledged &included in the Bibliography.

Gan
esh B. Patil.

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 CERTIFICATE
Ref. No. Date:

TO WHOMSOEVER IT MAY CONCERN

This is certify that Mr. Ganesh B. Patil, a M.B.A. student of Global Business

School (Jalgaon), have undergone a training & completed a project on “Study of

Receivable Management & credit Analysis”

He has carried out this project for Piramal Healthcare Ltd. (VFCD) from

04/06/2008 to 01/08/2008.

In the span of project duration his candidature was found to be very sincere

& hardworking.

We wish him a bright future.

Mr. Suresh Mohite

General Manager (H.R.)

Piramal Healthcare Ltd. (VFCD)

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 S Y N O P S I S

Studying in college & reading books help us to grow mentally. It

enriches our knowledge of particular subjects. But it is the
experience / practical knowledge that helps us for the overall
personality development. Hence for the proper development
theoretical as well as practical knowledge is required.
The very purpose of doing this project is to get actual exposure
to the corporate world. As this project is related to Finance
Department, it helped me to know the actual way of working in
Finance Department in an organization.
Piramal Healthcare Ltd. is a huge manufacturing firm existing
with its four decades of steadfast growth. It manufactures decanters,
valves, performing tubes etc.
I have contributed my best efforts in preparing this project of
Piramal Healthcare Ltd. Along with this I have taken practical insight
of some Finance dept. activities.
This practical knowledge will be beneficial for me in my future
objectives. Hence I will be always grateful to PHL members who
really helped me to get practical insights.

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 Preface
Debt management, by the standard financial definition, involves a
designated third party assisting a debtor with repayment of his or her debt.
Many companies specializing credit counseling offer debt management plans
to help people with heavy debt and damaged credit get their financial situation
under control. A simpler definition of debt management could be the routine
practice of spending less than one earns.

However, for all intents and purposes, debt management is a structured

repayment plan set up by a designated third party, either as a result of a court
order or as a result of personal initiation. Accounts receivable include
reimbursements due from state and federal sponsors of externally funded
research, patient billings, accrued income on investments, tuition, fees and
various other receivables. In order to effect early conversion of these
receivables to cash and minimize credit losses, each campus must maintain a
diligent program for managing receivables.

The management function consists of granting credit, billing accounts,

effecting collection, analyzing outstanding accounts (aging), and providing for
bad debts. In this project report the deep study of receivables is done which is
the main constitute of working capital. According to the expert is A/R one of a
series of accounting transactions. These accounting transactions deal with the
billing of customers who owe money to a person, company or organization for
goods and services purchased. If you are seriously considering using
accounts receivable as a method of obtaining a more liquid asset.

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 Some also call accounts receivable trade receivables and try to classify
them as current assets. Every organization has a clear focus on its accounts
receivable solution.

Many believe that they are doing all they can to maximize rapid
collection of outstanding debtors. Most organizations stick to a very standard
layout for their invoices rarely changing the standard output from their
accounting system. But simple redesign of the invoice can dramatically
improve its effectiveness. The term Debtor Day refers to the average number
of days it takes a company to receive payment from its customers.

Thereafter, the study of debtor’s day and reduction of debtors day has
been carried out for company i.e. Vitamins and fine chemicals division of PHL
is focused upon. This research paper is about to reduce the credit period
allowed to debtors considering the receivable which is the essential ingredient
of working capital.

An attempt is made to analyze & reduce the gap between total required
for one particular transaction to complete and actual time which company is
allowed to customer as debtor days

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 EXECUTIVE SUMMARY
• INTRODUCTION OF THE PROJECT
In this project I have covered following topics:
1. Analysis of credit period allowed to debtors.
2. How to reduce the debtor’s day.
3. Export procedure and export documents required for shipment

• PROJECT TITLE
‘Study of receivable management & Credit analysis’

• LOCATION
Piramal Healthcare Ltd, Vitamins & Fine Chemicals Division, Mumbai-Agra Road,
Balkum, Thane-400 608, Maharashtra.

• DURATION OF PROJECT
04/06/2008 to 01/08/2008

• HOW THE PROJECT WAS CARRIED OUT

With a field force of about 3,000, companies sales, marketing and distribution
network is among the largest in the country. Companies business is spread throughout
the world, as it is one of the well known manufacturers of Vitamin A. First i have studied
all the sales targeted by the company for current financial year and credit period
the have decided to customers based on various factors. Then i made the break-up of
the credit period and analyze the places where the reduction is possible. Finally I have
made an attempt to reduce the credit period wherever possible.

OBJECTIVE OF THE PROJECT

1. To analyze the procedure of allowing the credit period to debtors.
2. To reduce the debtor’s days and minimize the risk of bad debts.
3. To study the Export procedure & documents.

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 INDEX
TOPIC Page no.
CHAPTER: - 1
Company Introduction 12-21
• Company Vision & Mission 13
• History of PIRAMAL Group of Companies 14
(Formerly known as NPIL)
• Corporate Strategy & Corporate Structure 16-17
• Sites of PHL in UK & INDIA 17
• VFCD Profile 18-19
• Product Details 20
• Organizational Structure 21

CHAPTER:-2
Research Methodology 22-25
• Object of the Study. 23
• Objective of the project 23
• Approach to Research 23
• Data collection 24
1. Primary data
2. Secondary data
• Limitations of the Project 25
• Data Analysis 25

CHAPTER:-3
Project Theory 26-40
• Receivable management & A/C Receivable 27-30
• Credit management & Credit decision process 31-34
• Export Procedure & export Documents 35-40
TOPIC PAGE NO.

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CHAPTER:-4
Practical Insights of Project 41-52
• Observation And Analysis of given transaction/orders 41-46
• Final Break-up of credit period 47-49
• Possible reduction of credit period 50-52

CHAPTER:-5
Conclusions 53-55
- General conclusions 54
- Company specific conclusion 55

CHAPTER:-6
Suggestions & 56-57
Recommendations 57

CHAPTER:-7
Bibliography 58-59

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 CHAPTER: - 1

Company
Introduction

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 Piramal Healthcare Limited (PHL)
Mission

• Making a difference to the Quality of Life by reducing the burden of disease.

Vision

• To become the most admired pharmaceutical company in India with leadership in

market share, research and profits by:
• Building distinctive sales and marketing capabilities
• Evolving from licensing to global launch of own patented products
• Inculcating a high performance culture, being the partner of choice
• Always adhering to ‘our values’ based on our obligations as trustees of customers,
employees, shareholders and society
• We shall pursue world-class standards in our People, Products, Processes,
Partnerships and Performance
• Encouraging Innovation and Nurturing Intellectual Capital

Corporate Values

• Continually enhancing value for our customers with quality products and services to
meet their changing needs.
• Empowering our employees, encouraging innovation and entrepreneurship in an
environment which makes work fun.
• Steadily building wealth for our shareholders
• Contributing to the well-being of society and the environment.
• Continually enhancing value for our customers with quality products and services to
meet their changing needs

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 • Empowering our employees and encouraging innovation and entrepreneurship in an
environment which makes work fun.

HISTORY

The company was formed when the Piramal Group acquired Nicholas Laboratories,
a small formulations company in 1988 from Sara Lee.

Piramal Healthcare Ltd (formerly Nicholas Piramal India Ltd) is the flagship company
of the Rs. 2500 crore (US $ 500 million) Piramal Enterprises (PEL), one of India's largest
diversified business houses. The Group is headed by Mr. Ajay Piramal, who is also the
Chairman of Piramal Healthcare Ltd, and among the most respected names in Indian
industry.

Piramal Healthcare Ltd is one of India's largest companies with an unmatched

record of managing JVs/Alliances/Partnerships, and a proven commitment to IPR. With
strong brand management and sales capabilities, a US FDA site-approved plant for on-
and-off patent APIs and Intermediates, Basic Research, Process Innovation, Custom
Chemical Synthesis, Formulations R&D, NDDS, and a world-class, accredited Clinical
Research Organisation, PHL is poised to emerge as India's pharma powerhouse.

Revenues for FY2008 up by 16% to Rs. 28.7 billion, Operating Profit for the year
crosses Rs. 5 billion, Net Profit up by 53% to Rs. 3.3 billion making FY2008 a landmark
year for the Company

PHL's biggest brands in the pharma business are Phensedyl, Ismo, Supradyn,
Gardenal, Stemetil, Haemaccel and Rejoint - these bring in 67 per cent of the business,
while its secondary brands which include Paraxin, Flagyl and Omnatax contribute around
24 % of its revenues.

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 It is a leader in the Cardio-vascular segment. It has a strong presence in Antibiotics
and Respiratory segments, Pain management, Neuro-psychiatry and Anti-Diabetics
segments. The company is also making forays into Biotechnology in key therapeutic areas
for which it has formed several global alliances

PHL has joint ventures and alliances with some of the finest global names in the
industry which include F. Hoffmann-La Roche Ltd., Switzerland; Allergan Inc., USA; UK;
Gilead Sciences, USA; Cheissi, Italy; and IVAX Corp; UK.

Some of PHL's major acquisitions include the Indian operations of Roche Products
Ltd., Boehringer Mannheim India Ltd., Hoechst Marrion Roussel Ltd,'s Research Centre,
Rhone Poulenc India Ltd., ICI India Ltd.'s Pharma Division and Aventis' Research facilities.
PHL's core strengths are its 2700-strong field force that offers it the depth and width in the
Indian market.

Corporate Strategy

PHL's medium-term business model envisages achieving leadership in the domestic

pharmaceuticals market, and building a strong de-risked international business around
our core strengths in manufacturing, marketing and R&D.

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 Piramal Healthcare Limited has an unmatched record of managing Joint
Ventures/Alliances/Partnerships and a proven commitment to IPR. Capabilities include
sales & marketing, a US FDA site-approved plant for on-and-off patent APIs and
Intermediates, Basic Research, process innovation, Custom Chemical Synthesis,
Formulations R&D, NDDS, and a world-class Clinical Research Organization.

Piramal Enterprise has range of business like Textile, Engineering, Glass,

Pharmaceutical, Apparel Retail, Mall Management, Real Estate and Food Retail etc.

CORPORATE STRUCTURE
Board of Directors:
• Mr. Ajay G. Piramal Chairman
• Mr. Y. H. Malegam Director

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• Dr. Swati A. Piramal Director - Strategic Alliances &
Communication
• Mr. S. Ramadorai Director
• Mr. Deepak Satwalekar Director
• Mr. R. A. Shah Director
• Mr. N. Vaghul Director
• Mr. Keki Dadiseth Director
• Mr. N. Santhanam Executive Director & Chief
Financial Officer

The services of PHL are offered from its sites in UK & India.

PHL at present has 4 sites in UK at Huddersfield, Morpeth, Billingham and

Grangemouth. While the first three sites offer PMS services, Grangemouth site offers
manufacturing services in the High Potency APIs segments

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VITAMINS & FINE CHEMICALS DIVISION

The Piramal Group acquired shareholding of F.Hoffmann-La Roche Ltd.,

Switzerland, in the Indian subsidiary, Roche Products Limited. Post acquisition, the
company was renamed as Piramal Healthcare Ltd.
Piramal Healthcare Limited was later merged with the group’s flagship Pharma company
Nicholas Piramal India Ltd (now named as Piramal Healthcare Ltd.)

Piramal Healthcare Limited's Vitamin and Fine Chemicals Division has been
manufacturing and selling the most IMPORTANT MICRONUTRIENT - VITAMIN A, for the
last 40 years. Since the takeover of the plant in 1993, chairman is Mr. Ajay Piramal &
President is Mr. Mick Fernandez. The plant is run professionally and is meeting with the
country's requirements in total. The VFCD division achieved a turnover of Rs.76 crores
during the F.Y. 2007-08. The division has set a target turnover of Rs.108 crores for the
current year.

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 Piramal Healthcare is the largest and the only producer of Vitamin A in South Asia.
Maintaining World-class quality standards is an obsession with top management and
percolates to every level, making the plants a landmark of quality. The plant at Thane have
obtained the coveted ISO 9001 & ISO 14000 certificates and also the SQF 2000 & HACCP
Certification.

Vitamin A is the main product of VFCD

Core Strengths of VFCD manufacturing facility apart from Vitamin A

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• Liquid Ammonia based Cryogenic reactions (upto minus 40 0 C )
• Lithium Ammonia reactions -Berch reduction type
• High vacuum (1 -2 mm Hg abs) fractionation with Sulzer column ( 22 ft high) and
packed columns
• Grignard reactions
• Atmospheric Hydrogenation using Lindlar catalyst
• Lindlar catalyst regeneration facility
• Capacity for Tretinoin Manufacturing
• Methyl Vinyl Ketone (MVK ) manufacturing capability and surplus capacity
• Betaionone manufacturing capability and surplus capacity
• Nitrogen generation plant for inertization of vessels
• Molecular Sieves based Solvent Drying plant, currently for Diethyl Ether Drying
• All Stainless Steel reactors and piping
• ISO - 9001 and ISO - 14001 certified

Product Details
• PRODUCT RANGE:

1. Human Nutrition & Health (HNH)

2. Animal Nutrition & Health (ANH)
3. Cosmetics & perfumery

• PRODUCT VARIETY:

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In HNH product range the company produces: Pharma Grade Products
a) Food Grade Products
b) Customized Premixes

In ANH product range the company produces:

a) Feed Grade Products
b) Customized Premixes

ORGANIZATIONAL STRUCTURE OF
VFCD,PHL,Thane.

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 PRESIDENT:
OPERATIONS

VICE_PRESIDE GM_QC
NT QA HOD Institutional HOD Mktg.
CORPORATE
Business (Domestic)

MGR. Institutional Domestic Mktg. &

business Disstig. Staff

HOD Strategic HOD QC

HOD API Mktg
Planning
HOD Finance UNIT HEAD

MKTG.
Export team HOD Excise Export Doc. HOD P& A HOD Engg.
Perfumery

Finance/ A/C HOD Prod. HOD

HOD IT
Staff (Chem.) EPS/SAFETY

HOD LOG HOD Prod. (CF)

(purchase) HACCP-TL

HOD
MS/PPC

HOD QA / TQM
HOD PCL
(MR)

RA
QA
QA Staff
Staff RA Staff
Staff

MGR R&D
HOD R& D(CF)
Chem.

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 CHAPTER: - 2

Research
Methodology

Research Methodology

• Objective of the project

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 1. To study the concept of working capital at Piramal Healthcare Ltd (VFCD)
Thane.
2. To study the receivable management in PHL.
3. To analyze the process of credit decision-making.
4. To find out the possible way to reduce the credit period allowed to
customers.

• Object of the study

As part of MBA curriculum Course it is mandatory for every student for the
completion of 2 years MBA course to do a SUMMER PROJECT after 1st year of the
course in any organization for a period of near about 2 months. This is with a view to
help the students to learn partially in the corporate sector the theory implications
taught in the class room. To fulfill this requirement, I have taken up a project on
STUDY OF RECEIVABLE MANAGEMENT AND CREDIT ANALYSIS in Piramal
Healthcare Ltd (VFCD), Thane.

• Approach to Research

Research is considered to be the more formal, systematic and intensive

process of carrying on a scientific method of analysis. Research methodology is a
way to systematically solve the research problem. It is important for research to
know not only the research method but also the methodology. “The procedures by
which researchers go through their work of describing, explaining and predicting
phenomenon are called methodology.”

• Data Collection

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 Data Collection is an important step in methodology of any project and
success of any project will be largely depend upon how much accurate you will be
able to collect and how much time, money and efforts will be required to collect the
necessary data.

1. Primary Data:
The Primary Data is a fresh and first hand data which is collected for the first time
and happen to be original in character.
We have collected the information and data through formal and informal
discussions with our professional guide in the organization, and through personal
interviews of the Marketing persons and the people who handle all export
transaction of the company; and also the keen observation method is also used for
collection for primary data collection.

2. Secondary Data:
The secondary data is the data which have already collected and stored. We can
easily get secondary data from records, journals, annual reports, newsletters and
books. It will save the time, money and efforts in collecting the data.
We also have collected the data related receivable management & credit
judgement from annual reports, website of Piramal healthcare, newsletters, books, &
related reports of inventory from project guide.

• Limitations Of Study

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 1. The study of this project is restricted to the only few customers depend upon
their potential and their position in the market.
2. The study of this project limited to the boundary of NLC (national level of
credit.
3. The duration of the project was short to collect all the information required.
4. Company has some financial information secrecy regarding its policies, which
was not disclosed at the time of the project.

• Data Analysis

Data analysis has been carried out in this way-

1. First of all I collect the data required from the company website and the
reports from official documents.
2. Then I analyze the report of sales projected for current financial year.
3. Secondly I sort out the customers and countries that have credit period 90
days, 60 days & 30 days.
4. Then I found out the break up of that credit period by discussing with
concerned people.
5. Then I made out the beak up and try to found the event whher I could find
the scope for reduction.
6. Finally, I select few customers and formulate the sheet showing reduction
in their credit period.
In this I have completed my project.

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CHAPTER: - 3

Project
Theory

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 Working Capital

• Working Capital refers to the cash a company requires in order to finance its day to
day business operations or it is the amount of capital which is readily available to an
organization.

Working Capital = Current Assets – Current Liabilities

• Working capital refers to a firms short term assets and short term liabilities
includes accounts receivable, inventory and accounts payable how much cash to keep on
hand, inventory to carry, credit terms to offer to customers are examples of working capital
management decisions

Working Capital Cycle

1. Purchase of raw material

2. Conversion of R.M. to F.G

3. Sale of F.G. &

4. Realization of A/c receivable

•The firm has to maintain cash balance to pay the bills as they come due.
•In addition, the company must invest in inventories to fill customer orders
Promptly.

•And finally, the company invests in accounts receivable to extend credit to customers.

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•Operating cycle is equal to the length of inventory and receivable conversion periods.

MANAGEMENT OF WORKING CAPITAL ( WCM )

Management of working capital is concerned with the problems that arise in

attempting to manage the current assets, the current liabilities and the inter-
relationship that exists between them. In other words, it refers to all aspects of
administration of CA and CL.
Working Capital Management Policies of a firm have a great effect on its
profitability, liquidity and structural health of the organization.

PROFORMA - WORKING CAPTIAL ESTIMATES

MANUFACTURING CONCERN

STATEMENT OF WORKING CAPITAL REQUIREMENTS

Amount (Rs.)
Current Assets
(i) Stock of R M( for ….month’s consumption) -----
(ii)Work-in-progress (for…months)
(a) Raw Materials -----
(b) Direct Labour -----
(c) Overheads -----
(iii) Stock of Finished Goods ( for …month’s sales)
(a) Raw Materials -----
(b) Direct Labour -----
(c) Overheads -----
(iv) Sundry Debtors ( for …month’s sales)
(a) Raw Materials -----
(b) Direct Labour -----
(c) Overheads -----
(v) Payments in Advance (if any) -----
(iv) Balance of Cash for daily expenses -----
(vii)Any other item -----
Less : Current Liabilities
(i) Creditors (For….. Month’s Purchases) -----
(ii) Lag in payment of expenses -----
(iii) Any other -----
WORKING CAPITAL ( CA – CL ) xxxx
Add : Provision / Margin for Contingencies -----
NET WORKING CAPITAL REQUIRED XXX
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Receivable
Money which is owed to a company by a customer for products and services
provided on credit. This is treated as a current asset on a balance sheet. A specific sale is
generally only treated as an account receivable after the customer is sent an invoice.

Day’s receivable

A measure of the average time a company's customers take to pay for purchases,
equal to accounts receivable divided by annual sales on credit times 365.

Accounts Receivable – AR

Money owed by customers (individuals or corporations) to another entity in

exchange for goods or services that have been delivered or used, but not yet paid
for. Receivables usually come in the form of operating lines of credit and are usually due
within a relatively short time period, ranging from a few days to a year.

Accounts receivable are not limited to businesses - individuals have them as well.
People get receivables from their employers in the form of a monthly or bi-weekly
paycheck. They are legally owed this money for services (work) already provided.

Net Receivables

A company's accounts receivable (money owed to the company) minus bad debts. If
a company estimates that 2% of its sales are never going to be paid, then net receivables
equals 98% (100% - 2%) of the accounts receivable.
Whether a business is growing too fast or the customers are paying too slowly, a
cash crunch is the likely result. As companies grow, it is natural that more and more of their
sales get locked up in receivables. While retailers may be immune from this particular
problem, most businesses are not.

A/C Receivable

The role of Accounts Receivable departments, and finance as a whole, is rapidly

transforming in today’s enterprise. Formerly thought of as a purely administrative role, A/R

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functions extending from credit and collections to cash management are now being viewed
as a strategic cornerstone that can deliver unprecedented competitive advantage and
greater profitability for leading corporations.

Recent surveys of forward thinking companies have cast a clearer light upon the
forces which are currently driving A/R departments. A/R departments are under pressure to
provide strategic information around cash flow to CFOs and treasury groups, and at the
same time to better manage the customer-to-cash cycle and improve transactional
efficiencies. Mastering this three-part role of strategic financial guidance, revenue
management, and low-cost efficiency is crucial to building high performance A/R
departments. However, many companies face the challenge of fusing these three, often
divergent, roles into one streamlined and effective organizational entity.

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 CREDIT MANAGEMENT

Credit Management embraces all the activities designed to manage and protect a
company’s investment in receivables.

‘Receivables’ are amounts of money owed to the company (seller) by its customers
(buyers) for goods (including raw materials and/or services) supplied to the customers.

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 It is the role of Credit Management to support the Sales Force in its efforts to
maximize sales without endangering the survival of the company.

Sales of goods are the only source of revenue and the main source of funds for
future growth for most businesses.

Credit Management has an equally important investment management role.

In many companies the investment in receivables is one of the largest assets

appearing on the balance sheet and one which demands a significant commitment of
precious working capital resources. An increase or reduction in the amount invested in
receivables will usually have a significant (negative or positive) impact on the company’s
cash flow and on the company’s cash cycle.

The ‘cash cycle’ is the time required to convert goods into cash; from the date the
company pays the costs of acquisition of the goods to the date of receipt of the cash from
related sales.

When a company agrees to deliver goods, without receiving immediate payment, it

gives "credit" to the buyer.

It has been said that "a sale is a gift until it is paid for" - this maxim emphasizes
firstly that the seller gives the buyer free use of the goods for a period of time and secondly
that often in the sale process a tangible asset (goods) is converted into an intangible asset
(receivables).

Competition between sellers is the main motivation behind any offer to provide
credit.

In a situation of monopoly supply the seller can demand terms such as "cash in
advance" but where competition is the rule credit terms can offer a major source of
competitive advantage.

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 In fact when the ‘product’ offered for sale is a ‘commodity’ (such as a certain type of
crude oil) it is often true that, when comparing offers made by competing sellers, delivery
dates are not materially different and transport arrangements are similar. In such
circumstances offering unique credit terms may be the only way to win a buyer from the
competition.

It is therefore correct to remark that Credit Management has become an important

'sales tool'.

In a world of increasingly transparent markets (markets where all relevant

information is freely available to buyers and sellers) the importance of the role of credit
terms in providing a competitive advantage is growing.

Nonetheless the risk of loss of a receivable and the danger which this presents to
the survival of the company is still the compelling force behind the need for Credit
Management. The loss of a large amount of working capital in this way would almost
inevitably lead to the failure of a company.

However this risk should not be eliminated, it must rather be managed. Risk is an
essential business ingredient hence the belief that "taking risk offers reward”. The reverse
is a business truism stated thus; "no risk equals no reward".

The Credit Decision Process

Marketing contact

Credit investigation

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 Customer contact for information

Finalize written documents, e.g.. security agreements

Establish customer credit file

Financial analysis
• Credit Period
The average length of time between the purchase of inputs and the payment for
them. Equal to the average level of creditors divided by the purchases on credit per
day.

• Credit Risk
The risk that counterparty to a financial transaction will fail to fulfil their obligation.

• Debtors
those who owe a debt.

• Debtors Conversion Period

The average number of days to convert customer debts into cash

OBJECTIVES

The objective of Receivables Management is to take sound decision as regards to

investment in Debtors.
“To promote sales and profits until that point is reached where the return on

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investment in further funding of receivables is less than the cost of funds
raised to finance that additional credit”

Features

1. Improve customer satisfaction.

Enhance service levels and increase retention with customized information, history,
and notes that are easily accessible when working with customers.
2. Take control of sales processes.
Manage your sales process more effectively by measuring trends and analyzing
performance with comprehensive customer tracking combined with sales tracking by
person or territory.
3. Enhance the productivity.
Help reduce administrative costs and enhance office productivity with automated
receipt processing and posting and personalized statement cycles that fit your
customers and business.
4. Streamline revenue allocation.
Simplify the task of deferring revenues over multiple periods with automatically
managed calculations and journal entries customized to fit your business needs.
5. Provide access to vital information.
Find the information you need to make more effective business decisions with
comprehensive reporting capabilities and straightforward customer account and sales
performance tracking.

Export Procedures

Format of export order at VFCD

The execution of export order follows a definite procedure of 13 steps-

1. Having an export order

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2. Examination and confirmation of order

3. Manufacturing or Procuring goods

4. Clearance from Central Excise

5. Pre-shipment Inspection

6. Appointment of Clearing and Forwarding Agents

7. Goods to Port of shipment

8. Port formalities & Custom clearance

9. Dispatch of Documents by Forwarding Agent to the exporter

10. Certificate of Origin

11. Dispatch of shipment Advice to the importer

12. Submission of Documents to Bank

13. Claiming export incentives

• Every exporter should take following initial steps -–

1. Obtain BIN (Business Identification Number) from DGFT. It is a PAN based number
2. Open current account with designated bank for credit of duty drawback claims
3. Register licenses / advance license / DEPB etc. at the customs station, if exports are
under Export Promotion Schemes

37
 • Marking and Labeling

Goods must be labeled and marked. Shipping marks are important to the safe and
speedy transfer of the products. In fact, marks, complying with legal requirements, assist
carriers and Custom Authorities to identify the goods. Common shipping marks are the
identification of the importer, the number of the packing case, the port of destination, gross
and net weight, outside measurements of the case, the country of origin and cautionary
marks if careful handling is needed. However, rules applying to shipping marks can vary
according to the country of destination.

Labeling requirements vary according to the country of destination. Normally,

detailed rules are applied to foodstuff, pharmaceuticals and cosmetics, textile and
garments. The importer provides details on labels according to the requirements in the
country of destination.

• Export Clearing

Once the goods are loaded on board, the clearing agent prepares the Export
Declaration Form. This is a document stating that the goods have been exported. The
Export Declaration Form is submitted to the Customs Authorities, when presenting the
documents for shipment.

Content of the Export Declaration Form

It describes the products, states their value and weight, and specifies the country of
destination, port of embarkation and arrival, the name of the exporter and the carrier.

• Fees & Taxes

There are no taxes, tariffs or duties to pay on exports. The importer will pay the required
duties and taxes at the port of destination. Port fees to be paid are 1.3% of the value of the
shipment.

38
 • Transportation

The exporter should contract a trucking agency to transport the goods from the
warehouse to the port of embarkation. Goods can be transported to the port area in
containers or in other transport cases. In the latter case, the clearing agent, the trucking
agency or the forwarding company could load the container. If the goods are transported in
containers from the warehouse, then the exporter must arrange with the shipping or
forwarding company for the container to be brought and filled at the factory. Generally, the
exporter fills the container at the factory when goods are not packed in carton boxes.

Export documents
1. Official Documents

Official documents are documents required for the purpose of official (regulatory)
authorization to export. Official documents are either submitted to the appropriate authority
for legalization or are issued by an appropriate authority. Without local authorization (from
competent Jordanian authorities), you will not be permitted to ship your goods out the
country.

1. Customs or Export Declaration

2. An export License or Authorization
3. A wharfage order (for sea freight)
4. A pre-shipment inspection certificate
5. A certificate of origin
6. A health certificate

2. Commercial Documents

These are documents, which support the sales contract between the exporter and importer.
They are issued by the exporter confirming that he/she has met all the terms and conditions
of the sales contract. Examples of commercial documents are:

39
1. Commercial invoice
2. Packing list
3. Beneficiary certificate
4. Verification documents

• Invoice

An Invoice contains the name of the exporter, terms of payment, unit price, total price,
quantities and weight of the goods. There are differences between pro-forma and
commercial invoices. The pro-forma invoice is a document prepared by the exporter in
response to a sales order or inquiry. Its receipt by the importer does not obligate the
potential buyer to purchase the product. A commercial invoice, sent by the exporter,
includes specifications that both parties have agreed upon in advance and must be printed
on the exporter’s official letterhead. The importer should sign a copy and return it to the
exporter. The commercial invoice could be a copy of the pro-forma invoice if that was
unchanged by sales negotiations.

• Packing List

A Packing List should be prepared by the producer/exporter. The packing list indicates the
gross and net weight of the cargo, invoice number and the importer’s name. It clearly states
all products sent by the exporter as well as the number of pallets, boxes, the contents of
each box and the type of products, their quality and specifications.

3. Transport Documents

Transport documents are distinguished from the commercial documents in that they
represent a contract of carriage with a third party. Transport documents are fundamental to
the payment and delivery process in an import transaction.

40
 There are three main types of transport documents that can be used in international
transport. They are:

1. Airway bill
2. Bill of lading
3. Consignment note

• Bill of Lading

A Bill of Lading is the transportation contract between a carrier and the owner of the
goods. The carrier issues it and can be negotiable and non-negotiable. Negotiable means
that the goods can be traded while in transit.

• Airway Bill

An Airway Bill (for airfreight) is a document constituting the carrier’s confirmation of

receipt for transport. The carrier issues it and is only non-negotiable, therefore the goods
cannot be traded while in transit.

• The purpose of all transport documents is to:

-Provide proof that the carrier has received the goods,

-Show evidence of a contract of carriage, and
-Produce a freight bill (information on transport details and costs)

4. Insurance Documents

Insurance documents also constitute evidence of a contract with a third party,

namely the insurance company and therefore must be distinguished from the commercial
documents.

41
 • The two main insurance documents are:

-Insurance certificate

-Insurance policy

5. Some other documents required

• Customs export declaration

• Inspection report
• Technical standard/health certificate
• Terminal handling receipts

Free On Board - FOB

Fob means that the seller delivers when the goods pass the ship’s rail at the named
port of shipment. This means that the buyer has to bear all costs and risks of loss of or
damage to the goods from that point. The fob term requires the seller to clear the goods for
export. This term can be used only for sea or inland waterway transport .A trade term
requiring the seller to deliver goods on board a vessel designated by the buyer. The seller
fulfills its obligations to deliver when the goods have passed over the ship's rail.
When used in trade terms, the word "free" means the seller has an obligation to
deliver goods to a named place for transfer to a carrier. Contracts involving international
transportation often contain abbreviated trade terms that describe matters such as the time
and place of delivery and payment, when the risk of loss shifts from the seller to the buyer,
as well as who pays the costs of freight and insurance.

42
 CHAPTER: - 4

Practical
Insights of
The Project

43
 Review of VFCD

Piramal Healthcare Limited's Vitamin and Fine Chemicals Division has been

manufacturing and selling the most IMPORTANT MICRONUTRIENT - VITAMIN A and

its various commercial forms, dry powder, Liquid, pharmaceutical formulations and bulk

drugs at the Thane factory. Apart from this they also manufacture Vitamin Premixes for

Human Nutrition and Animal Nutrition.

VFCD produces following percentage of products mainly-

1. ANH - 15%
2. HNH - 14%
3. Pharma - 15%
4. Institutional Business - 03%
5. Cosmetics - 04%
6. Fragrance & Flavor - 07%

• In my project I covered the customers of international market because it generates

more revenue for us. How the company follows up the order and how it records the
transaction. Along with that I have covered the points that company takes into
account while deciding the credit period.

PHL (VFCD) takes use of SAP software for sales transaction-

44
 • SAP Stands For :
Systems Applications and Product in Data Processing
• Modules implemented by SAP
SD – Sales and Distribution
FI – Financial Integration – Statutory/External Reporting
• In SAP Group code & Account Range of following sales terms is as follows
DRS-SUNDRY DEBTORS-4200000-4229999
SLS-SALES-5000000-5099999
• Masters in SAP For Sales

Customer Master: - Important fields in material master.

Broadly divided into General Data, Co Code Data, Sales Area

Customer Code : Customer code series has been defined as

Export Starting with 5 ……. (6 digit code)
Domestic Starting with 5 ……. (8 digit code)

Customer Name
Country Name - Defines Geographical area.
Division - Defines Customer Belongs to which Division.
Distribution Channel - Defines type of sale like export, direct, consignee
Payment Terms - Defines Credit Period
Reconciliation Account - Defines Control Account in GL for Sub ledger
Tax Classification - Defines Relevant to Tax or Not

Report on receivable management :-

45
 I have studied the files of work projected to be done by Mr. Yogesh Pawar sir
in the financial year 2008.
I have done this analysis from it –
• Credit allowed to all countries is reasonable
• However there is a scope for reduction in credit limit for some cases
• Analysis is as follows-

1. Bangladesh- in this country many customers have paid through l/c at sight, only
one case of WFP Bangladesh follows their standard credit terms & procedures
by taking credit of 30 days.

No of Credi
Sales Bud GM (Rs Shipme t Credit
Customer Name (Rs Lacs) Lacs) GM % Pay Term nts Days Limit
2,000,0
KAZI FARMS LIMITED 130 33 25% L/C at Sight 6 30 00
1,000,0
WFP Bangladesh 62 20 32% DA 30 Days 6 30 00
New customers 43 17 40% TT Payment 0 -
ESKAEF BANGLADESH 500,0
LTD. 30 8 28% LC at Sight 6 30 00
(blank) 20 14 69%
400,0
Opsonin Pharma Limited 18 5 28% L/C at Sight 5 30 00

Micronutrient Initiative 6 3 55%

2. Sri Lanka: - In Sri Lanka many customers paid their payment in advance
and some takes the credit of 30 days. Out of which there is a scope of reduction
in credit period is observed in case of Astron limited. As order of Astron ltd. Is of
only 100gm and time required for shipment is only 5 days at max. So we can
stretch the credit period upto 5 to 10 days.

No of
Sales Ship Credi
Bud (Rs GM (Rs Pay ment t
Customer Name Lacs) Lacs) GM % Term s Days Credit Limit
DA 30
LWL CHEM INTERNATIONAL 71 38 53% Days 8 30 900,000

46
 New customers 22 11 49% -
Advanc
Cereal Products 7 4 59% e 0 -
DA 30
UNILEVER CEYLON LTD. 5 3 56% Days 3 30 200,000
Advanc
Milco 2 1 34% e 0 -
DP at
ASTRON LIMITED 1 0 -1% Sight 30 -
D/P at
Sunrich Confectionaries 1 0 -6% Sight 30 -

3. Ethiopia:- In Ethiopia all customers pay their payment by L/c at sight or by

negotiation
; Though here credit of 30 days was allowed but it is at optimum level, so
there is no scope for reduction in credit period.

No of
Sales Ship Credi
Bud (Rs GM (Rs ment t
Customer Name Lacs) Lacs) GM % Pay Term s Days Credit Limit
MY Global 51 31 61% LC at Sight 3 30 1,800,000
Faffa Food Share
Company 23 14 61% LC at Sight 3 30 800,000
LC By
Guder Agro 6 4 61% Negotiation 2 30 300,000

4. Pakistan: - In Pakistan all customers pay their payments in advance

except the WFP Islamabad, which follow their own credit terms and
procedures by taking credit of 30 days.

Sales No of
Bud (Rs GM (Rs Pay Shipment Credit
Customer Name Lacs) Lacs) GM % Term s Days Credit Limit
New customers 25 12 49% -
Milestone Marketing 15 3 17% 3 500,000

47
 DA 30
WFP Islamabad & Afghan 12 8 65% Days 2 30 600,000
Habib Oil Mills 5 1 17% 1 500,000
Sadiq Vegetables 5 1 17% 1 500,000
Kisan Vegetable 5 1 17% 1 500,000

• Then Finally I have selected few customers from these all and analyze their credit
period break up and try to reduce it as follows-
•

Total Time Break-up

CUSTOM MONEY BANK

TRANSI COUNTI SHIPME CLEARAN TRANSF ADVIC
COUNTRY CUSTOMER PRODUCT BY T TIMT NG NT TIME CE ER E TOTAL

BANGLA VIT
DESH WFP PREMIX SEA 21 3 3 2 3 4 36
SRI ASTRON
LANKA LIMITED Tretinoin AIR 3 0 3 2 3 4 17
LWL CHEM
SRI INTERNATI
LANKA ONAL SEA 8 3 3 2 3 4 23
UNILEVEL
SRI CEYLON NICOVITI
LANKA LTD. N ULE AIR 1 1 2 2 3 4 13

Conclusion

CREDIT
TYPE OF PERIOD TOTAL EXTRA FOR STRETCH
COUNTRY CUSTOMER CUSTOMER ALLOWED TIME SALE UPTO

FINAL
BANGLADESH WFP CONSUMER 30 36 -6 0

48
 ASTRON FINAL WEAK
SRI LANKA LIMITED CONSUMER 30 17 13 CO.
LWL CHEM
INTERNATIO
SRI LANKA NAL DISTRIBUTOR 30 23 7 D
UNILEVEL
CEYLON FINAL REPUTED
SRI LANKA LTD. CONSUMER 30 13 17 CO.

Similarly,
• I have studied the files of work projected to be done by Mr. Dhawal Kulkarni sir in
the financial year 2008. I have selected few customers from these all and analyze their
credit period break up and try to reduce it as follows-

I have done this analysis from it –

Total Time Break-up

CUSTO
TYPE OF M
CUSTOME QUANTI TRANSI COUNTI SHIPMENT CLEARA
COUNTRY COMPANY R PRODUCT TY BY T TIME NG TIME NCE TOTAL
Vitamin A
AGD Palmitate
NUTRITIO DISTRIBU 1.7
USA N TOR mIU/gm 100 SEA 33 3 3 3 42
FINAL
TEVA CONSUM Vitamin
ISRAEL ISRAEL ER D3 200 50 AIR 2 2 3 3 10
Dl-Alpha
TEMPO DISTRIBU Tocopher
USA CANADA TOR ol 1000 SEA 42 3 3 3 51
TEMPO DISTRIBU Vitamin
CANADA CANADA TOR D3 850 100 AIR 4 1 3 3 11
CUSTO
TYPE OF M
CUSTOME QUANTI TRANSI COUNTI SHIPMENT CLEARA
COUNTRY COMPANY R PRODUCT TY BY T TIME NG TIME NCE TOTAL

TEMPO DISTRIBU Vitamin

CANADA CANADA TOR D3 850 200 AIR 6 1 3 3 13
Vitamin
Premix-
Tempo DISTRIBU CAN-
CANADA Canada TOR Akuna 03 250 AIR 4 3 3 3 13
Mineral
Premix-
Tempo DISTRIBU CAN-
CANADA Canada TOR Akuna E 100 AIR 4 3 3 3 13

49
 Conclusion

CREDIT
TYPE OF ALLOWE EXTRA STRETCH
COUNTRY COMPANY CUSTOMER D TOTAL DAYS UPTO
DISTRIBUT
USA AGD NUTRITION OR 90 42 48 60
FINAL
ISRAEL TEVA ISRAEL CONSUMER 60 10 50 30
DISTRIBUT
USA TEMPO CANADA OR 90 51 39 60
DISTRIBUT
CANADA TEMPO CANADA OR 90 11 79 60
DISTRIBUT
CANADA TEMPO CANADA OR 90 13 77 60
DISTRIBUT
CANADA Tempo Canada OR 90 13 77 60

Similarly,

• I have studied the files of work projected to be done by Mr. Vikram sir in the
financial year 2008. I have selected few customers from these all and analyze their
credit period break up and try to reduce it as follows-

Total Time Break-up

CUSTO
TRAN M MONEY
COUNT COMPA QUANTI SIT COUNTI SHIPME CLEARA TRANSF BANK
RY NY PRODUCT TY in KG BY TIMT NG NT TIME NCE ER ADVICE TOTAL
RSA
SOUTH Wheat
AFRICA M&A Premix 3000 SEA 30 3 3 2 3 4 45
Vitamin
DINALA A 100
BRAZIL B WM 1220 AIR 7 2 3 2 3 4 21

50
 ESKE Chispita 20000
PERU GROUP s 00 SEA 75 7 10 2 3 4 99

Conclusion

TYPE OF CREDIT SRETCH

COUNTRY COMPANY CUSTOMER ALLOWED TOTAL EXTRA UPTO

SOUTH
AFRICA M&A DISTRIBUTOR 90 45 45 D
BRAZIL DINALAB DISTRIBUTOR 90 21 69 D
ESKE
PERU GROUP DISTRIBUTOR 90 99 -9 NO

Similarly,

• I have studied the files of work projected to be done by Mr. Mahesh sir in the
financial year 2008. I have selected few customers from these all and analyze their
credit period break up and try to reduce it as follows-

Total Time Break-up

CREDIT
QUANTITY PERIOD TRANSIT
COUNTRY CUSTOMER PRODUCT IN KG ALLOWED BY TIMT TOTAL
BANGLADES
H WFP VIT PREMIX 30 SEA 21 21
EGYPT LUNA CORPORATION 90 AIR 3 3
SRI LANKA ASTRON LIMITED Tretinoin 0.1 30 AIR 3 3
SRI LANKA LWL CHEM 30 SEA 8 8

51
 INTERNATIONAL
UNILEVEL CEYLON NICOVITIN 600
SRI LANKA LTD. ULE BOTTLES 30 AIR 1 1

Conclusion

TYPE OF CUSTOM MONEY

CUSTOME COUNTI SHIPMENT CLEARAN TRANSFE BANK EXTRA STRETCH
COUNTRY R NG TIME CE R ADVICE TOTAL FOR SALE UPTO

FINAL
BANGLAD CONSUME
ESH R 3 3 2 3 4 36 -6 0
EGYPT AGENT 3 3 2 3 4 18 72 NO BUZZ
FINAL
CONSUME
SRI LANKA R 0 3 2 3 4 17 13 WEAK CO.
DISTRIBU
SRI LANKA TOR 3 3 2 3 4 23 7 D
FINAL
CONSUME REPUTED
SRI LANKA R 1 2 2 3 4 13 17 CO.

• For Final analysis I have selected few customers at random and then carried out the
total analysis as follows
Observation
tran extra
TYPE OF sit ime for
CUSTOMER country Buyer Name BY time pay total CP(O)
DISTRIBUTOR USA AgD Nutrition SEA 33 57 90 90
DISTRIBUTOR CANADA Tempo Canada AIR 4 56 60 60
DISTRIBUTOR CANADA Tempo Canada AIR 6 54 60 60
DISTRIBUTOR CANADA Tempo Canada AIR 4 56 60 60
DISTRIBUTOR CANADA Tempo Canada AIR 4 56 60 60
DISTRIBUTOR USA Tempo Canada SEA 42 48 90 90
FINAL SRI Unilever Sri
CONSUMER LANKA Lanka AIR 1 29 30 30

52
 Total Time Break-up

TYPE OF STRET
countr Buyer CUSTO TOTAL EXTRA REDUCe CH CP
y Name Product MER CP(O) RES.TIME DAYS extra days UPTO
AgD Vitamin A
Nutritio Palmitate DISTRIB
USA n 1.7 mIU/gm UTOR 90 49 41 11 60/TT
Tempo
CANA Canad Vitamin D3 DISTRIB
DA a 850 UTOR 60 20 40 10 30
Tempo
CANA Canad Vitamin D3 DISTRIB
DA a 850 UTOR 60 21 39 9 30
Vitamin
Tempo Premix-
CANA Canad CAN-Akuna DISTRIB
DA a 03 UTOR 60 20 40 10 30
Mineral
Tempo Premix-
CANA Canad CAN-Akuna DISTRIB
DA a E UTOR 60 18 42 12 30
Tempo
Canad Dl-Alpha DISTRIB
USA a Tocopherol UTOR 90 56 34 4 60/TT
SRI Unil Sri Nicovitin FINAL
LANKA Lanka ULE COMER 30 17 13 0 TT

Conclusion

extra CUSTOM MONEY BANK

timE for CHECKIN SHIPME CLEARAN TRANSF ADVIC
Product Qty pay G NT TIME CE ER E TOTAL DIFF
Vitamin A
Palmitate
1.7 mIU/gm 100 57 3 3 3 3 4 16 41
Vitamin D3
850 100 56 3 3 3 3 4 16 40
Vitamin D3
850 200 54 2 3 3 3 4 15 39
Vitamin
Premix-
CAN-Akuna
03 250 56 3 3 3 3 4 16 40
Mineral
Premix-
CAN-Akuna
E 100 56 1 3 3 3 4 14 42
Dl-Alpha
Tocopherol 1000 48 1 3 3 3 4 14 34

53
 Nicovitin
ULE 600 29 3 3 3 3 4 16 13

• For above analysis I have CALCULATED THE TIME PPERIOD FROM

FOLLOWING DATES FOR RESPECTIVE ORDERS OF CUSTOMERS

Date OF
DISPATCH(from Date of
Buyer Name company) Shipment(port) Date of Delivery Payment Date
AgD Nutrition 28.05.2008 29.05.08 02.07.2008 29.08.2008
Tempo Canada 20.06.2008 21.06.08 25.06.2008 21.08.2008
Tempo Canada 24.06.2008 25.06.08 01.07.2008 25.08.2008
Tempo Canada 10.06.2008 13.06.08 17.06.2008 13.08.2008
Tempo Canada 10.06.2008 13.06.08 17.06.2008 13.08.2008
Tempo Canada 10.06.2008 18.06.08 30.07.2008 18.09.2008
Teva
Pharmaceuticals 18.06.2008 18.06.08 20.06.2008 18.09.2008
Unilever Sri Lanka 28.05.2008 28.05.08 29.05.2008 25.06.2008

54
 CHAPTER: - 5

Conclusions

Company Specific Conclusions

• Company has to look to enhance their productivity, so that they can fulfill the
customer requirement on time and follow for their own credit standards.

• They have to demand for the reduction for credit period as per the customer,
whether customer is distributor, agent or final consumer.

• Also have to try to stretch the customer where we have monopoly about the product.

• As per the observations I mentioned the conclusions as follows-

1. In USA, For Tempo Canada we have to set credit period of 60days, because
though he is a distributor we already allowing him a extra 40 days for selling
of goods, so it is possible to stretch him on 60 days from 90 7 120 days.

55
 2. In Canada, for Tempo Canada We can stretch him to credit period of 30 days
from 90 days. Because he is getting goods within 25 days if consignment is
by air and it will takes 40 days if by sea, he is getting extra period of 40 days.
So it is possible to stretch him.

3. While in Cases like Astron Ltd. 7 Uniliver Cyclone In Sri lanka, they are the
final consumer and they are getting the goods within 10 to 15 days by sea or
by air. So it is possible to demand for advance or TT payment from them.

• Company have to set some credit standard for each country or each customer
based on the factors mention below-

VFCD (PHL) have to allows credit to its customers according to these factors

• Type of business

• Product

• Financial position of firm

• Credibility

• Intermediator agent

• Profit margin

• Sales budgeted

• ECGC cover

• Previous relation with company

• Country policies

• Bank assistance

• Company norms & background

• Past experience

Avoid these issues in receivable management

56
• weak credit judgment

• Delay in collection procedures

• Delay in issue of invoices or statements

• errors in invoices or statements

• customer dissatisfaction

General Conclusions

• Simple Improvements in credit policy

• Discounts offered wherever it fits to the RBI norms

• Demand for more order if we have monopoly for the product

• To bound customers offer free samples for better industrial relationship

• Following the past records to avoid bad debts by the use of ECGC

• Credit standards set for particular customers as per their NLC

CHAPTER: - 6
57
Suggestions
&
Recommend
ations

Suggestions & Recommendations

• Have the right mental attitude to the control of credit and make sure that it gets the
priority it deserves.

• Establish clear credit practices as a matter of company policy.

• Make sure that these practices are clearly understood by staff, suppliers and
customers.

58
• Be professional when accepting new accounts, and especially larger ones.

• Check out each customer thoroughly before you offer credit. Use credit agencies,
bank references, industry sources etc.

• Establish credit limits for each customer... and stick to them.

• Continuously review these limits when you suspect tough times are coming or if
operating in a volatile sector.

• Keep very close to your larger customers.

• Invoice promptly and clearly.

• Consider charging penalties on overdue accounts.

• Consider accepting credit /debit cards as a payment option.

• Monitor your debtor balances and ageing schedules, and don't let any debts get too
large or too old.

59
 CHAPTER: - 7

Bibliography

Bibliography

1) Company Website: www.nicholaspiramal.com &

www.vfcdnicholas.com
2) Company sales report & Sales orders of financial year 2008

3) For export documents www.doingbusiness.com

60
61