OPTIMISING CASH CONVERSION CYCLE USING ACCOUNT RECEIVABLE MANAGEMENT

• Main Author: Valmai Devina, Edlyn
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/35548
• Institution: Institut Teknologi Bandung

PT ABC as one of the biggest consumer goods company in Indonesia, should keep innovating and develop their strategy to make their business grow. Currently, the major problem that company facing is the fluctuated of working capital and the average collection period that getting increased year to year. In general, one of the most controversial management decisions is in profit and working capital management which plays a significant role in the growth and survival of profit. So, the objectives of this research is to evaluate the working capital management practices in PT ABC. The average collection period of PT ABC is increased from 39 days in the year 2015 to 41 days in the year 2016 and 42 days in the year 2017. The profit also fluctuated from Rp 2,923,148 (In Millions of Rupiah) in the year 2015 and Rp 3,631,301 (In Millions of Rupiah) in the year 2016 and the last one Rp 3,543,173 (In Millions of Rupiah) in the year 2017. The working capital itself was determined by the Cash Conversion Cycle (CCC), Average Collection Period, Average Age of Inventory and Average Payment Period. This study analyzes the cash conversion cycle of PT ABC whose has higher CCC compare to other companies in the same industry. This analysis focused on optimizing the average collection period. Therefore, this study aims to solve these problems by analyzing the Cash Conversion Cycle and make a simulation for the company while using relaxing credit method and initiating discount method. Based on the analysis, PT ABC should take account receivable management as an important factor and also should consider the bad debt that they allowed to has. Based on the research, the author finds that initiating discount is the most proper method to optimize the working capital.