Refining Measures to Improve Performance Measurement of the Accounts Receivable Collection Function

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Title Refining Measures to Improve Performance Measurement of the Accounts Receivable Collection Function
Author Lamminmaki, Dawne Martha; Leitch, Philip
Journal Name Journal of Applied Management Accounting Research
Editor Prof Gart Marchant; Prof Janek Ratnatunga
Year Published 2011
Place of publication Australia
Publisher The Institute of Certified Management Accountants
Abstract Accounts receivable management is an important facet of financial management. The average collection period and aging schedule are two widely used gauges of accounts receivable collection performance. These performance measures are deficient, however, especially when used for internal evaluation, as a change in the average collection period or the composition of an aged schedule does not necessarily relate to a change in collection efficiency. This study proposes refinements to these metrics. In the case of the ageing schedule, it is proposed that accounts receivable values should be related to their original credit sales. To calculate the average collection period, it is proposed that the balance of accounts receivable should be divided into age categories and these categories should be matched to the credit sales that generated them. The manner in which these revised measures constitute more accurate internal indicators of accounts receivable performance is outlined and empirically examined
Peer Reviewed Yes
Published Yes
Publisher URI http://cmawebline.org/joomla4/index.php?option=com_content&view=article&id=45&Itemid=47
Copyright Statement Copyright 2011 The Institute of Certified Management Accountants. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Volume 9
Issue Number 2
Page from 1
Page to 20
ISSN 1443-9913
Date Accessioned 2011-07-12
Date Available 2012-06-13T22:28:03Z
Language en_US
Research Centre Griffith Institute For Tourism
Faculty Griffith Business School
Subject Management Accounting
URI http://hdl.handle.net/10072/41011
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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