Shenzhen JIT Technology: Accounts Receivable Management Issues

Case Solution

Dazhi Chu, Li Wang
Ivey Publishing ()

In March 2012, the president of Shenzhen JIT Technology Co., Ltd., a small electronics manufacturer in Shenzhen, China, had a problem with the company’s undisclosed receivables. The company had high AR levels, and the time it took to settle these accounts was much longer than the industry average, resulting in financial difficulties. The company had formalized its sales commission structure to include a system of rewards and penalties related to collecting outstanding AR payments, but these new rules had not solved the AR problem. The president needed answers: What was the primary reason for the company’s high accounts receivable and AR sales? What was wrong with their AR policy? What specific approach to RA volume management would solve these problems?

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