Accounts Receivable Overdue and Market Dynamics: A Case Study

Authors

  • Niek STAM
  • Wim WESTERMAN University of Groningen, The Netherlands

DOI:

https://doi.org/10.29015/cerem.678

Keywords:

Accounts Receivable, Overdue, Market Dynamics, Case Study

Abstract

Aim: This study aims to find out which market dynamics are currently relevant for accounts receivable levels (specifically overdues), and how lessons learned can be used by credit management.

Design / Research methods: The unique research strategy is characterised as a single case study with design elements at two country units of a company to be named FEED. The classification and overview of relevant market dynamics provide valuable insights for determinants and intercompany differences in receivables, and whether these arise at the country or market level.

Conclusions / findings: The classification and overview of relevant market dynamics provide valuable insights for determinants and intercompany differences in receivables, and whether these arise at the country or market level.

Originality / value of the article: The findings suggest adjustments of the literature in that the interest rate is currently not a relevant factor. Moreover, instead of focussing on costs of capital, an emphasis on default risk is more applicable nowadays, and hence researchers should focus on overdue instead of on receivables in general.

References

References

Biais, B., Gollier, C., 1997. Trade credit and credit rationing. Review of Financial Studies, 903-937.

Biernacki, P., Waldorf, D., 1981. Snowball sampling: problems and techniques of chain referral sampling. Sociological Methods and Research, 141-163.

Centraal Bureau Statistiek, 2016. Consument merkt weinig van lagere melkprijs boeren ("Consumer notices little of loer milk proice farmers"). Centraal Bureau Statistiek, The Hague. Available from: https://www.cbs.nl/nl-nl/nieuws/2016/40/consument-merkt-weinig-van-lagere-melkprijs-boeren

Ernst & Young, 2013. Analysis on future developments in the milk sector. European Commission, Brussels.

European Commission, 2016. Milk market situation. European Commission, Brussels.

Farm Credit East, 2016. Northeast dairy farm summary. Farm Credit East, New York NY.

Filbeck, G., Krueger, T., 2005. An analysis of working capital management results across industries. American Journal of Business, 11-20.

Hailemariam, S., 2001. Corporate value creation, governance and privatisation. University of Groningen.

Heijes, C. P. A., 2016. Accounting of working capital: evidence from the work floor. A case study on the use of financial and operational ratios. University of Groningen.

Hermes, N., Kihanga, E., Lensink, R., Lutz, C., 2012. The impact of trade credit on customer switching behaviour: evidence from the Tanzanian rice market. Journal of Development Studies, 363-376.

Hermes, N., Lensink, R., Lutz, C., Thu, U., 2016. Trade credit use and competition in the value chain. Economics of Transition, 24(4), 765-795.

Hillier, D., Ross, S., Westerfield, R., Jaffe, J., Jordan, B., 2016. Corporate Finance. McGraw-Hill Education, 3rd European Edition, London.

Howorth, C., Reber, B., 2003. Habitual late payment of trade credit: an empirical examination of UK small firms. Managerial and Decision Economics, 471-482.

Jick, T. D., 1979. Mixing qualitative and quantitative methods: triangulation in action. Administrative Science Quarterly, 602-611.

Koesling Anderson, 2015. Milch-Manager Auswertung. Koesling Anderson, Dahlenwarsleben.

LTO Nederland, 2016. Standardized milk price calculations. LTO Nederland, The Hague.

Nederlandse Zuivel Organisatie., 2016. Factsheet prijsschommelingen melk ("Factsheet price volatility milk"). Nederlandse Zuivel Organisatie, The Hague.

Ng, C. K., Smith, J. K., Smith, R. L., 1999. Evidence on the determinants of credit terms used in interfirm trade. The Journal of Finance, 1109-1129.

Nilsen, J. H., 1999. Trade credit and the bank lending channel, SSRN (working paper).

Nooteboom, B., 1996. Trust, opportunism and governance: A process and control model. Organization Studies, 985-1010.

OECD Finance Department, 2016. Short-term interest rates. Available from: https://data.oecd.org/interest/short-term-interest-rates.htm.

Peel, M. J., Wilson, N., Howorth, C., 2000. Late payment and credit management in the small firm sector: some empirical evidence. International Small Business Journal, 17-37.

Petersen, M. A., Rajan, R. G., 1997. Trade credit: theories and evidence. Review of Financial Studies, 661-691.

Pike, R., Cheng, N. S., 2001. Credit management: an examination of policy choices, practices and late payment in UK companies. Journal of Business Finance & Accounting, 1013-1042.

Rabobank, 2016. Cijfers & Trends: Banche informatie melkveehouderij ("Figures and Trends: sector information dairy firms"). Rabobank, Utrecht.

REL Consultancy, 2016. Europe working capital survey. The Hackett Group, Inc.

WebFinance Inc., 2016. Definition of market dynamics. Available from: http://www.businessdictionary.com/definition/market-dynamics.html.

Wilson, N., Summers, B., 2002. Trade credit terms offered by small firms: survey evidence and empirical analysis. Journal of Business Finance & Accounting, 317-351.

Yin, R. K., 2014. Case study research: design and methods. SAGE Publications, London.

Downloads

Published

2018-09-27

Issue

Section

Articles