EXPLORING RECEIVABLES MANAGEMENT ISSUES : CASE STUDY OF A FAMILY-OWNED AGRIBUSINESS IN NORTH SUMATRA

• Main Author: Enjelytha Patrycia Br S, Meisya
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/82836
• Institution: Institut Teknologi Bandung

This research explores the receivables management issues faced by Business X, a family-owned trading business in the agribusiness sector based in North Sumatra. The investigation reveals that the lack of formal credit policies, inconsistent and informal collection practices, inadequate credit analysis, and insufficient manual record-keeping have significantly contributed to these receivables management issues. In running the business, the founder placed high trust in customers and tended to apply a compassionate approach. The founder's informal communication methods and the absence of written contracts ultimately led to significant financial pressure, as customers often delayed or failed to pay while the founder continued to meet obligations to suppliers. This scenario resulted in a high percentage of uncollected receivables, reaching 61% of the total outstanding amount, with some debts potentially uncollectible. Behind the implementation of these ineffective policies lies a significant role played by the founder's personality, which is a result of the strong interaction between values, mentality, and psyche. The founder's personality, shaped by values such as empathy, integrity, and spirituality, although strengthening strong relationships, ultimately created financial vulnerability due to the lack of firm boundaries and clear policies. The founder's optimistic mentality and high trust in customers led to credit being granted without formal agreements, weakening their legal position and resulting in financial challenges. After the founder's accident in December 2023, other family members took over the business, implementing more structured and proactive debt collection strategies. Their approach resulted in the recovery of one-fifth of the total receivables, demonstrating effectiveness in improving financial conditions. This transition highlights the contrast between the founder's empathetic yet lenient approach and the pragmatic and business-focused strategies of the family members. This analysis emphasizes the need for a balanced integration between personality and efficient business practices to ensure financial stability and long-term sustainability. This research underscores the importance of a multidisciplinary approach, combining economic and psychological perspectives, to develop sustainable receivables management strategies. The economic perspective helps in understanding the financial impact of credit policies and collection strategies, while psychology contributes by exploring the influence of personality and individual values on receivables management. The integration of these perspectives allows for a more holistic and effective approach in creating sustainable and balanced receivables management strategies. Recommendations for Business X include clearer role distribution, with the founder focusing on sales and customer relationships while other family members handle financial management. To design appropriate credit policies in the future, Business X needs to consider the cultural aspects of Indonesia, which are more compatible with flexible policies. In this regard, Business X should balance social and business aspects to ensure business continuity. Additionally, implementing a community system or blacklist to identify and manage problematic customers is also recommended. For future research, this study suggests exploring the direct impact of personality on receivables management practices that can be generalized. With a more holistic and effective approach, Business X can develop sustainable receivables management strategies that balance financial efficiency and strong customer relationships.