Journal of Environmental Treatment Techniques  
2019, Special Issue on Environment, Management and Economy, Pages: 939-943  
J. Environ. Treat. Tech.  
ISSN: 2309-1185  
Journal web link: http://www.jett.dormaj.com  
Main Trends of Corporation Accounts Receivable  
Optimization  
*
Khristina A. Pavlova , Daniya K.  
.
Bikchantaeva  
Institute of Management, Economics and Finance, Kazan Federal University, Kazan, Russia  
Received: 13/09/2019 Accepted: 22/11/2019 Published: 20/12/2019  
Abstract  
Accounts receivable, being the most important factor of the positive cash flow of any company, is under close attention of its  
management. The definition and maintenance of receivables at an acceptable level allows a company to solve the problems of its  
obligations to creditor repayment timely and to predict cash flows. In this regard, the systematic approach to the formation of a  
portfolio of debtors is of particular importance, taking into account the specifics of a company. This article discusses the main trends  
of counterparty obligation optimization of an enterprise through factoring mechanisms, mutual claim offset and debt restructuring.  
Debt optimization does not come down to work with problem customers. This process is ongoing and covers two aspects, both at the  
formation stage and in relation to the existing debt structure. The choice of a financial mechanism must be made on the basis of a  
counterparty credit rating compilation, which is necessary for companies from the perspective of the temporary aspect of cash  
resource receipt. This proposal is interesting in the practice of a particular financial scheme selection. The practical part of the article  
is devoted to specific calculations of financial instrument use such as factoring and debt restructuring. The advantages and  
disadvantages of each of them are shown and attention is paid to the timeliness of their application, since the real value of money  
received as the implementation result of these schemes will differ from their nominal value. Specific calculations are based on the  
official reporting of "KAMAZ" PJSC, which also allows us to conclude that the article is of practical importance.  
Keywords: Accounts receivable, Accounts payable, Factoring, Restructuring, Cash flows, Mutual obligations  
1
financial schemes are used in the practice of receivables  
1
Introduction  
management. Each of them involves the observance of  
certain conditions, the implementation of which ensures the  
effectiveness of their implementation. At the same time, their  
use should not be of a template nature, as each enterprise has  
its own specifics in production and commercial activities.  
In the framework of this article, they will consider the  
theoretical and practical aspects of the most effective  
measures (in our opinion) to optimize the receivables of an  
enterprise.  
The factors which determine the success of business  
development and its financial attractiveness are represented  
by the building of long-term relationships with contractors  
(
1). The business reputation of a company, the reliability of  
its financial flows and, ultimately, the investment  
attractiveness depends on their effectiveness. In such a  
variety of relations, a special place is occupied by accounts  
receivable, which is one of the most important conditions for  
a positive cash flow development of any organization. The  
quality of the portfolio of debtors largely determines the  
solvency of a company and its financial stability.  
2 Methods  
The problem of timely payments by debtors has been and  
remains relevant both in the current moment of an enterprise  
activity and during the prediction of its cash flows. In this  
regard, the issues of counterparty obligation management,  
determination of overdue and bad debts and the timely  
adoption of measures aimed at minimization of losses in  
cases of untimely fulfillment of obligations (2,18,19) become  
particularly relevant. To address these issues various  
The quality of accounts receivable, as all know, is  
characterized by three indicators: its “average age” (the  
period of provision), the degree of late repayment risk, and  
the proportion of overdue and problem liabilities in their  
aggregate value (3). And this, in turn, determines the main  
trends for the optimization of accounts receivable, which are  
the sequence of stages and a set of measures aimed at debtor  
portfolio quality improvement. The optimization process can  
be considered from two aspects: optimization of an existing  
portfolio of receivables and optimization relative to potential  
partners. In other words, both at the formation stage and in  
relation to the existing debt structure.  
Corresponding Author: Khristina A. Pavlova, Kazan  
Federal  
University,  
Kazan,  
Russia.  
E-mail:  
khristinsha@mail.ru.  
9
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Journal of Environmental Treatment Techniques  
2019, Special Issue on Environment, Management and Economy, Pages: 939-943  
Each of these aspects involves its own tools and methods,  
and, above all, proper analysis conduct. So, potential  
counterparties are subject to a more thorough analysis for  
their degree of solvency and the assessment of transaction  
effectiveness, taking into account the form of payment,  
possible risks and additional costs associated with the  
conclusion of contracts (6, 11, 12). Regarding regular  
customers, the structural analysis is carried out according to  
several criteria: the timing of occurrence and repayment,  
according to the degree of the counterparty importance for  
the enterprise (ABC analysis), according to the established  
amounts of a commodity loan. Thus, a company receives not  
only a complete picture of the current and possibly future  
state of receivables, but also the ability to predict the receipt  
of funds, taking into account a pre-developed settlement  
procedure for the future period and possible amounts of bad  
receivables.  
The most effective mechanisms for receivable  
optimization are factoring, offsetting mutual claims and their  
restructuring. It is advisable to select and apply them on the  
basis of a counterparty credit rating compilation, which  
allows ranking debtors not only by the degree of their  
solvency and timeliness of their obligation fulfilling, but also  
by the needs of an enterprise in cash resources at a particular  
time moment. In other words, a credit rating is necessary for  
a company from the perspective of the temporary aspect of  
cash inflows. So, if debt restructuring is applied to problem  
debtors, the factoring scheme can be applied both to bona  
fide buyers and customers, and in relation to overdue debts.  
The option of mutual claim offsetting is possible if a  
company has, first of all, mutual obligations and, secondly,  
the goals of the company pursues in this case: priority of  
repayment of receivables or payables.  
relates to the problem of receivables. The fact is that drawing  
up an additional agreement to the principal debt and setting a  
schedule for paying off overdue debts will allow a company  
to receive, albeit by installments, but still a positive cash  
flow. At the same time, several options are possible, starting  
from mitigating the penalty conditions specified in the main  
contract, ending with a flexible schedule for main debt  
repayment.  
Considering a restructuring option, it must be borne in  
mind that the real value of cash received will differ from the  
nominal value of the debt by a discount coefficient that  
reflects the level of the inflation component. Offsetting  
mutual claims is also an interesting financial tool for large  
corporations with extensive cooperative ties, assuming the  
existence of mutual obligations between its counterparties (8,  
10, 14). In these conditions, the management of such  
enterprises can solve the problems arising with the repayment  
of debts through their mutual offsets. Mutual liabilities are  
selected by counterparties, maturity and amount of debt, as  
well as their degree of content uniformity. The significance  
of this debt repayment mechanism is the simultaneous write-  
off of obligations. At that, there is no real cash flow.  
3
Results and Discussion  
The theoretical aspects of accounts receivable  
optimization through factoring and debt restructuring, are  
considered in the second part of the article, provide specific  
calculations for one of the leading Russian enterprises  
"KAMAZ" PJSC. The structural analysis of accounts  
receivable for three reporting periods (2016 - 2018) showed  
the growing dynamics of this indicator, and its growth was  
significantly faster than revenue growth. In the structure of  
total receivables, customer and buyer liabilities decreased  
from 58% to 43%. Over the same period, advance payments  
have grown significantly (by 12.8%). During consideration of  
receivable optimization approach application feasibility in  
terms of cash receipts, the obligations of suppliers and  
contractors should not be taken into account. As for short-  
term liabilities, loans and borrowings increased from 9% to  
Let's consider the appropriateness of the abovementioned  
method application to optimize receivables.  
The goal of a factoring transaction for an enterprise is the  
speed of receipt of funds from the sale of relatively liquid  
receivables (7, 13,15,16,17). Its use is conditioned by several  
reasons. The first is the degree and frequency of the need for  
cash resources at any given point of time. The second reason  
is the problem of external financing source attraction. The  
price of a factoring transaction will depend on the degree of  
the receivable liquidity and its maturity, the interest rate of  
the bank loan provided by the factoring company and the  
commission of the factoring company (2, 9,20).  
21%, and accounts payable decreased from 27% to 19% in  
general sources of financing over the same period. In general,  
the total amount of current liabilities of "KAMAZ" PJSC  
exceeds the amount of receivables excluding advance  
payments to suppliers and contractors by 2.4 times. Hence  
the relevance of timely payments by debtors.  
The feasibility of a factoring agreement conclusion for  
the sale of receivables is conditioned, first of all, by the real  
possibility of a faster receipt of funds, since such a  
transaction may take place before the receivable maturity. If  
overdue debt falls into a factoring transaction, then in this  
case an enterprise removes the problem of its collection. In  
any case, the factoring scheme is the receipt of funds with a  
certain discount. In addition, timely factoring is the most  
important factor to accelerate the turnover of receivables.  
Thus, choosing the feasibility of a factoring scheme  
The effectiveness of the factoring transaction for  
KAMAZ" PJSC can be shown by the example of other  
receivables, the share of which in total liabilities was 38%  
15,443.4 million rubles) in 2018. So, if 5% of this amount  
or 772.2 million rubles) were spent through factoring  
"
(
(
operations, then the positive flow of a company could make  
02.3 million rubles under the most severe conditions of the  
6
transaction (with the discount of 22%). Thus, "KAMAZ"  
PJSC would have reduced the amount of receivables by 772.2  
million rubles. At that, cash received in the amount of 602.3  
million rubles could be sent towards paying off accounts  
payable, in particular, on tax liabilities, which amounted to  
application,  
a company proceeds from its monetary  
component. Its effectiveness will be determined by the  
relevance of timely fulfillment of obligations of an enterprise:  
the payment of suppliers' bills, tax obligations, loan  
servicing. The restructuring of liabilities, as was noted above,  
1
,405.7 million rubles in 2018. In addition, as the result of  
this scheme, the speed of circulation of receivables would be  
9
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Journal of Environmental Treatment Techniques  
2019, Special Issue on Environment, Management and Economy, Pages: 939-943  
reduced by 1 day. The effect of factoring operations on the  
turnover rate is presented in Table 1.  
Table 1: The influence of the factoring on the rate of accounts receivable turnover  
Indicator  
Вefore factoring  
After factoring  
Change  
Average amount of accounts receivable excluding advance  
payments, mln rub.  
Turnover ratio of accounts receivable excluding advance  
payments, turnover  
Period of repayment of accounts receivable excluding  
advance payments, in days  
2
5
6
8 313  
,33  
8
27 627  
-686  
5,47  
67  
+0,14  
-1  
Source: compiled by the authors on the basis of the accounting and analytical balance of "KAMAZ" PJSC for 2018.  
Table 2: Initial conditions for scheduling the restructuring of "KAMAZ" PJSC receivables  
Indicator  
Unit  
Value  
Amount of overdue debt  
The period of delay  
thousand rubles  
180 000  
90  
Days  
%
Amount of penalty for each day of delay  
Penalty amount for the period of delay  
0,03%  
thousand rubles  
thousand rubles  
4 860  
The total amount of indebtedness  
Source: compiled by the author  
184 860  
Table 3: Offered repayment schedule options thousand rubles  
Restructuring option  
Month 1  
Month 2  
Month 3  
Month 4  
Month 5  
Month 6  
Option 1- equal share  
principal debt  
accrued interest  
Total  
180 000  
4 860  
30 000  
810  
30 000  
810  
30 000  
810  
30 000  
810  
30 000  
810  
30 000  
810  
184 860  
30 810  
30 810  
30 810  
30 810  
30 810  
30 810  
Option 2 - deferred payment of penalties  
principal debt  
accrued interest  
Total  
180 000  
4 860  
30 000  
30 000  
30 000  
30 000  
30 000  
30 000  
30 000  
1 620  
30 000  
1 620  
30 000  
1 620  
184 860  
31 620  
31 620  
31 620  
Option 3 - flexible schedule  
principal debt  
180 000  
18 000  
10%  
27 000  
15%  
27 000  
15%  
36 000  
20%  
36 000  
20%  
36 000  
20%  
the percentage of repayment of principal  
accrued interest  
4 860  
1 215  
28 215  
1 215  
37 215  
1 215  
37 215  
1 215  
37 215  
Total  
184 860  
18 000  
27 000  
Option 4 - without payment of penalties  
principal debt  
180 000  
18 000  
10%  
18 000  
10%  
36 000  
20%  
36 000  
20%  
36 000  
20%  
36 000  
20%  
the percentage of repayment of principal  
accrued interest  
4 860  
Total  
184 860  
18 000  
18 000  
36 000  
36 000  
36 000  
36 000  
9
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Journal of Environmental Treatment Techniques  
2019, Special Issue on Environment, Management and Economy, Pages: 939-943  
Source: compiled by the authors  
Table 4: Calculation of the real value of cash flow for each restructuring option  
Discount rate  
0,99643  
0,992872  
0,989327  
0,985794  
0,982274  
0,978767  
Cash flow, thousand rubles  
Option 1  
Option 2  
Option 3  
30 700  
29 893  
17 936  
17 936  
30 590  
29 786  
26 808  
17 872  
30 481  
29 680  
27 914  
35 616  
30 372  
31 171  
36 686  
35 489  
30 264  
31 060  
36 555  
35 362  
30 156  
30 949  
36 425  
35 236  
Option 4  
Source: compiled by the authors  
The practical application of the financial instrument for  
the restructuring of overdue receivables is also relevant for  
effective system development for an enterprise settlement  
discipline development. A very important factor of their  
successful implementation is the timeliness of the decision on  
the choice of a tool, since they are aimed at a positive cash  
flow development of an enterprise. As calculations showed,  
the real value of the repaid obligations and their nominal  
value do not match. Therefore, the time aspect of these  
operations is of particular importance. The sooner and faster  
certain measures are taken, the greater the financial ability of  
an enterprise to make managerial decisions.  
"KAMAZ" PJSC. In order to not delay the delay, it is  
advisable, in case of contractual obligation violation for more  
than three months, to offer debtors to restructure their debts  
so that the accumulated overdue debts do not burden  
subsequent payments. So, if "KAMAZ" PJSC has overdue  
receivables of more than 3 months in the amount of 180  
million rubles and accrued interest for this period in the  
amount of 4.86 million rubles, the debtor is invited to  
restructure the debt for 6 months. During scheduling the  
repayment of the main debt and accrued interest, you can  
choose one of the options that would satisfy both parties.  
These may be the following options:  
5
Summary  
The problem of receivables optimization is multifaceted  
and complex. In the framework of one article it is impossible  
to consider all its aspects. The obligations of counterparties,  
on the one hand, are future cash and therefore they must be  
transparent and clearly foreseeable in the future (4, 5). On the  
other hand, when they conclude contracts, there is always a  
risk of their untimely receipt or complete absence. The  
growth of receivables leads to the alienation of funds.  
Therefore, any company has the problem of finding an  
optimal amount of receivables, which would not allow a  
company to solve the problems of its obligations by  
additional borrowed source attraction.  
-
Monthly repayment of principal and accrued interest in  
equal shares over the entire restructuring period;  
Monthly repayment of the principal debt with deferred  
payments of accrued interest;  
The development of a flexible schedule for the principal  
-
-
debt and accrued interest repayment on the conditions of  
repayment amount gradual increase;  
-
The development of a flexible schedule for principal  
debt repayment without taking into account the repayment of  
accrued interest.  
The choice of this or that option is determined by several  
reasons: the importance of the counterparty for the enterprise,  
the debtor's ability to repay the debt fully in principle.  
Possible options for debt restructuring are shown in table 2,  
6
Acknowledgements  
The work is performed according to the Russian  
Government Program of Competitive Growth of Kazan  
Federal University.  
3. Proceeding from the proposed calculations, it is possible to  
calculate the real value of cash flows for each option, taking  
the annual inflation rate at 4.3% in 2018. The real value of  
cash receipts for each option is shown in table 4.  
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