Receivables Management in Small Enterprises: A Theoretical and Conceptual Approach

The problem of receivables management arises when merchandise is sold on credit. When an enterprise makes an ordinary sale of goods and services and does not receive payment, the enterprise grants credit and creates accounts receivable, which would be collected in future. Though commercial banks provide a significant part of requirements for working capital, receivables continues to be a major source of funds for small enterprises and accounts receivable that result from granting credit are major investment for the micro and small enterprises. The investment in accounts receivable is an important aspect, which requires careful management.