RANKING OF A SET OF ACCOUNTS RECEIVABLE STRATEGIES IN A MEXICAN REGIONAL COMPANY BASED ON A MULTICRITERIA APPROACH

Ochoa, Carlos Andrés Oñate; Insua, Daniel Verdugo; Leyva López, Juan Carlos; Noriega, Jesús Jaime Solano

doi:10.1590/0101-7438.2022.042.00246977

Carlos Andrés Oñate Ochoa

Universidad Autónoma de Occidente, Mexico - E-mail: carlos.anate@uadeo.mx

https://orcid.org/0000-0003-0343-8772

Daniel Verdugo Insua

Universidad Autónoma de Occidente, Mexico - E-mail: daniel.verdugo@uadeo.mx

https://orcid.org/0000-0002-4409-5449

Juan Carlos Leyva López ^**Corresponding author

Universidad Autónoma de Occidente. Economic and Management Sciences Department. Blvd. Lola Beltran y Blvd. Rolando Arjona, Culiacán, Mexico - E-mail: juan.leyva@uadeo.mx

https://orcid.org/0000-0002-4821-6324

Jesús Jaime Solano Noriega

Universidad Autónoma de Occidente, Economic and Management Sciences Department, Mexico - E-mail: jaime.solano@uadeo.mx

https://orcid.org/0000-0002-8762-1453

*Corresponding author

Focus	Methodology	Author (Year)	Key findings
Descriptive method	Semi-structured interview	Hasan, S., & Saha, A. K. (2014HASAN S & SAHA AK. 2014. Efficient Receivables Management A Case Study of Siemens Bangladesh Limited. Jahangirnagar University Journal of Marketing.).	This research presents a case study in a company in Bangladesh that proposes an approach to define appropriate credit policy for account receivable management and to analyze the empirical credit distribution process and the commercialization channels carried out by the company. Such an approach contributed to the definition of best practices for managing accounts receivable in Bangladeshi companies.
	Descriptive statistics	Kaur, B., Jindal, L., & Jindal, S. (2017KAUR B, JINDAL L & JINDAL S. 2017. A Study of Debtor Management of an Indian Company. Imperial Journal of Interdisciplinary Research.).	This research aims to build a system for debtor management based on credit policies, an existing account receivable management system, and interviews made to the credit and collection area using statistical analysis. The main contribution found in this study was the established system that gives companies the freedom to monitor the results of conventional credit policies.
	Descriptive statistics	Beck, T., Grunert, J., Neus, W.,& Walter, A. (2017BECK T, GRUNERT J, NEUS W & WALTER A. 2017. What Determines Collection Rates of Debt Collection Agencies? Financial Review.).	This research looks for potential determinants of the collection success, using descriptive statistics, concluding a negative correlation between the age of the account and the collection rate; the collection rate is lower if the debtor has gone through a collection process. Prior experience with the debtor seems to help achieve very high collection rates, among other conclusions, using regression models to a series of accounts receivable.
	Descriptive statistics	Fedaseyeu, V.,& Hunt, R. M. (2018FEDASEYEU V & HUNT RM. 2018. The Economics of Debt Collection: Enforcement of Consumer Credit Contracts. SSRN Electronic Journal.).	In this paper, the authors analyze the difference between the debt collection process within enterprises and third-party firms’ collectors, providing insights into which policy interventions may improve the functioning of the debt collection market. This paper concludes that the existence of third-party debt collectors works if the size of the delinquent credit mark is large enough to warrant it. Still, at the same time, it hurts the consumer who follows conventional collection practices.
	Descriptive statistics	Leontieva, J., Klychova, G., Zakirova, A., Zaugarova, E., Maletskaya, I., & Khamidullin, Z. (2019LEONTIEVA J, KLYCHOVA G, ZAKIROVA A, ZAUGAROVA E, MALETSKAYA I & KHAMIDULLIN Z. 2019. Formation of the credit rating of buyers for the preventive control of accounts receivable. E3S Web of Conferences.).	This paper defines a collector control based on internal and external sources of information to prevent or minimize debtors’ risk. Such a collector control allowed a decrease of credit default and the increment in the efficiency of ongoing transactions; thus, it helped maintain the enterprise’s financial stability.
	Balanced scorecard	Li, A. (2019LI A. 2019. Discussion on internal control of account receivable of small and medium-sized enterprises. Advances in Social Science, Education and Humanities Research.).	The author discusses the internal control of account receivables in a sample of small and medium-sized enterprises in China, suggesting that using a balanced scorecard to analyze the credit deficiencies can be used as an effective strategy to improve business benefits.
	Asymmetric information theory, descriptive statistics	Richard, E.,& Kabala, B. (2019RICHARD E & BENEDICTO K. 2019. Account Receivable Management Practices of SMEs in Tanzania: A Qualitative Approach. Business Management Review.).	This research focuses on describing management debtors’ process on small and medium enterprises in Tanzania using the asymmetric information theory and data analysis to determine a formal credit risk management process. The authors concluded that there is a problem of asymmetric information in the companies analyzed. However, they all use similar systems for collection to deal with asymmetric information.
	Interviews, descriptive statistics	Zhu, C., Dai, Y.,& Wu, Y. (2019ZHU C, DAI Y & WU Y. 2019. The impact of financial leasing on accounts receivable: Evidence from China’s equipment manufacturing industry. International Conference on Economic Management and Model Engineering.).	This paper analyzes the impact between financial leasing and accounts receivable in a company from China using a regression model to determine significant variables. The paper’s findings are that the finance leasing variable has a significant impact on accounts receivable.
Normative approach	Multiple regression analysis	Ikechukwu, O. I., & Nwakaego, D. A. (2015IKECHUKWU OI & NWAKAEGO DA. 2015. The Effect of Receivable Management on the Profitability of Building Materials/Chemical and Paint Manufacturing Firms In Nigeria. Journal of Research in Humanities and Social Science.).	This research uses empirical analysis to look for a relationship between receivable management and corporate profitability in some companies in Nigeria using multiple regression on some variables such as the return on asset ratio, accounts receivable ratio, debt ratio, and sales growth rate. Results showed that accounts receivable had positive and significant effects on the profitability ratio.
	Supply chain	Huijun, H., & Jing, Z. (2016HUIJUN H & JING Z. 2016. Recourse accounts receivable factoring financing ratio research based on multinational supply chain. International Conference on Service Systems and Service Management.).	This study analyzes how a bank’s resource accounts receivable factoring ratio is influenced by credit and exchange risks based on a multinational supply chain. Results show that the factoring financing ratio exchange increases when the rate prediction value and the compensation rate decrease when the exchange rate fluctuation range, financing time, factoring cost rate, and the bank capital costs rate are high.
	Regression method	Yao, H., & Deng, Y. (2017YAO H & DENG Y. 2017. Managerial incentives and accounts receivable management policy. Managerial Finance.).	This research studies the influence of managerial compensation incentives in the receivable management policy. A significant negative relation between managerial risk-taking incentives (VEGA) and accounts receivable was found, concluding that more outstanding VEGA encourages more excellent accounts receivable reduction.
	Object-oriented approach	Karma, I. G.,& Susanti, J. (2018).	This paper presents an information system for a travel company that manages accounts receivable and account payable processes. It details the flow of the proposed information system to efficiently handle accounts receivable and payable, concluding that integration with other systems such as reservation and accounting systems could facilitate the management of all areas.
	Econometric methodology	Masood, A., Gulzar, S., & Quddoos, M. U. (2018MASOOD A, GULZAR S & QUDDOOS MU. 2018. Impact of Working Capital Management on Bank’s Cash Holding Decisions in Pakistan. Pakistan Journal of Social Sciences (PJSS).).	This paper study the impact of working capital management by analyzing a collection variable measurement and using an econometric methodology to estimate an empirical model. Its findings show that working capital management is critical because it directly affects the business’s liquidity.
Decision support approach	MCDM, FAHP	Hung, C.-Y., Li, Y., & Chianga, Y. H. (2006HUNG C-Y, LI Y & CHIANGA HY. 2006. A fuzzy MCDM approach to evaluation of account receivable purchase. International Conference on Computers and Industrial Engineering.).	This paper presents a fuzzy multicriteria decision-making approach to evaluate account receivable collection instruments to obtain a ranking of account receivable tools using a fuzzy AHP method to determine the weights of decision criteria and establish a group of DMs integrated by experts and the finance manager. It concluded that there is a certain similarity between the analyzed companies. Furthermore, the ranking of preferences shows that compliance with firm policy, reduction in transaction risk, and reduction in transaction cost are the best-ranked criteria.
	Data mining, machine learning	Wu, D. D., Olson, D. L., & Luo, C. (2014WU DD, OLSON DL & LUO C. 2014. A decision support approach for accounts receivable risk management. IEEE Transactions on Systems, Man, and Cybernetics: Systems.).	This paper presents a decision support model for the accounts receivable risk management problem. This model assesses account creditworthiness by using a logistic regression model. Results show that the proposed logistic regression model presents better accuracy than other similar risk management scores, such as the Beacon score.
	Markov process and discriminant analysis	Zopounidis (1999ZOPOUNIDIS C. 1999. Multicriteria decision aid in financial management. European Journal of Operational Research 404-415.)	Although this paper is not focused on accounts receivable, it is essential to state the importance and contributions of MCDA as techniques for financial decisions in businesses. Among several financial problems exposed in this paper, the author suggests that Markov process and Discriminant analysis can be used as techniques for managing accounts receivable.
	DSS based on reasoning maps	Montibeller et. al. (2007MONTIBELLER G, BELTON V & LIMA MV. 2007. Supporting factoring transactions in Brazil using reasoning maps: a language-based DSS for evaluating accounts receivable. Decision Support Systems 2085-2092.)	Presents some reflections on an empirical research intervention using a reasoning map about the use of DSS to help decision-making in accounts receivable management in small enterprises in developing countries, emphasizing Brazilians’ enterprises. This paper does not provide a specific model for this kind of problem; instead, it aims to give a better understanding of the problem by using a DSS highlighting the importance of focusing on structuring the problem and operating models based on linguistic terms as these seems to be a weak practice in developing countries.
	Fuzzy comprehensive and AHP	Luo & Zhiya (2013LUO Y & ZHIYA C. 2013. Client Credit Evaluation Index System of Logistics Enterprises Based on Fuzzy Comprehensive and Analytic Hierarchy Process. nternational Conference on Information Computing and Applications.)	This paper proposes a client credit evaluation index system for logistic enterprises. For the construction of the index, the authors propose to model the problem using the comprehensive fuzzy method combined with AHP on ten indexes that are relevant to this kind of business. The model allows to evaluate any customer and get a score that reflects its quality for the company. Results presented on a practical case study show the applicability of the model. However, although the model seems prominent, it lacks objectivity; thus, it requires more research to be less subjective.
	DSS and value functions	Ensslin Neto & de Lima (2000ENSSLIN L, MONTIBELLER NETO G& DE LIMA MV . 2000. Constructing and implementing a DSS to help evaluate perceived risk of accounts receivable. Research and Practice in Multiple Criteria Decision Making: 248-259.)	This paper presents a DSS based on value functions, named RiskInvest, adapted to the financial business process of a Brazilian factoring company to tackle their accounts receivable management to evaluate their risk for decision-making support. The paper describes the whole process that a group of consultants followed, from understanding the problem to the model and the DSS construction. It also details the modules of the DSS and how it works. This paper does not present any evaluation for the DSS; thus, further analysis on its performance or comparison with other models can be made. However, the main contribution is that it can be used to understand how the accounts receivable process is carried on small or medium companies and how a DSS can be constructed and implemented to aim decision-making.

Types of accounts Receivable	The payment due days
a	From 0 to 30 days of debt
b	From 31 to 60 days of debt
c	From 61 to 90 days of debt
d	From 91 to 365 days of debt
e	From 366 to 730 days of debt

Notation	Accounts receivable strategies
S _a	Receipt of payment
S _b	Receipt of payment and disusing a payment letter
S _c	Receipt of payment and disusing a payment letter
S _d	Visit of an account receivable executive at home
S _e	Credit bureau and address the legal department

Notation	Accounts receivable strategies
S _a	Receipt of payment and reminder calls
S _b	Receipt of payment, issuing a payment letter, and remainder calls
S _c	Receipt of payment, issuing a payment letter, reminder call and call to the customer’s guarantee
S _d	Visit of an account receivable executive at home and agreement calls
S _e	Credit bureau and address the legal department

	Attributes
Alternatives	f _nd	f _pdd	f _rm	f _pdr	f _ccc
S_a	$ 21,014.00	30	$ 53,270,397.79	41%	42
S_b	$ 15,017.00	60	$ 22,682,068.83	42%	18
S_c	$ 8,585.00	90	$ 10,606,706.42	41%	8
S_d	$ 37,124.00	365	$ 25,920,250.10	43%	21
S_e	$ 184,073.00	730	$ 74,933,516.44	35%	59

	Criteria
Alternatives	f _nd	f _pdd	f _rm	f _pdr	f _ccc
S_a	0.98156	0.5	1	0.975	1
S_b	1	1	0.90728	0.95	0
S_c	1	1	0.42427	0.975	0
S_d	0.68865	1	1	0.925	0
S_e	0	0	1	0.975	1

Criteria	q	p	v
f _nd	6000	10000	20000
f _pdd	15	30	365
f _rm	4000000	6000000	0
f _pdr	1%	2%	0
f _ccc	7	30	0

Criteria	q	p	v
f _nd	0.03419	0.05698	0.11397
f _pdd	0.02143	0.04286	0.52143
f _rm	0.06218	0.09327	0
f _pdr	0.12695	0.25389	0
f _ccc	0.13725	0.58824	0

	Criteria weights
	f _nd	f _pdd	f _rm	f _pdr	f _ccc
Weights (w)	0.25	0.2	0.15	0.1	0.3

	Criteria
Alternatives	f _nd	f _pdd	f _rm	f _pdr	f _ccc
S_a	0.98156	0.50000	1.00000	0.97500	1.00000
S_b	1.00000	1.00000	0.90728	0.95000	0.00000
S_c	1.00000	1.00000	0.42427	0.97500	0.00000
S_d	0.68865	1.00000	1.00000	0.92500	0.00000
S_e	0.00000	0.00000	1.00000	0.97500	1.00000
weights (w)	0.25000	0.20000	0.15000	0.10000	0.30000
threshold (q)	0.03419	0.02143	0.06218	0.12695	0.13725
threshold (p)	0.05698	0.04286	0.09327	0.25389	0.58824
threshold (v)	0.11397	0.52143	0.00000	0.00000	0.00000

Test one parameters		Criteria					Proposed Ranking
Test one parameters		f _nd	f _pdd	f _rm	f _pdr	f _ccc	Proposed Ranking
Run 1	wights (w)	0.25	0.20	0.15	0.10	0.30
	Indifference (q)	5750.00	15.00	$ 3,900,000.00	0.01	6.00
	Preference (p)	9750.00	30.00	$ 5,900,000.00	0.02	25.00
	Veto (v)	22500.00	365.00	0.00	0.00	0.00
Run 2	wights (w)	0.25	0.20	0.15	0.10	0.30
	Indifference (q)	5500.00	7.00	$ 3,800,000.00	0.01	7.00
	Preference (p)	9500.00	20.00	$ 5,800,000.00	0.03	20.00
	Veto (v)	25000.00	300.00	0.00	0.00	0.00
Run 3	wights (w)	0.20	0.20	0.15	0.10	0.35
	Indifference (q)	6000.00	20.00	$ 4,000,000.00	0.02	15.00
	Preference (p)	11000.00	30.00	$ 6,900,000.00	0.03	30.00
	Veto (v)	20000.00	365.00	0.00	0.00	0.00

Test one parameters		Criteria					Proposed Ranking
Test one parameters		f _nd	f _pdd	f _rm	f _pdr	f _ccc	Proposed Ranking
Run 1	wights (w)	0.25	0.20	0.15	0.10	0.30
	Indifference (q)	2000.00	15.00	$ 3,000,000.00	0.01	7.00
	Preference (p)	6000.00	30.00	$ 4,000,000.00	0.02	30.00
	Veto (v)	25000.00	365.00	0.00	0.00	0.00
Run 2	wights (w)	0.25	0.20	0.15	0.10	0.30
	Indifference (q)	3000.00	20.00	$ 3,800,000.00	0.01	20.00
	Preference (p)	5000.00	30.00	$ 5,800,000.00	0.03	45.00
	Veto (v)	30000.00	250.00	0.00	0.00	0.00
Run 3	wights (w)	0.25	0.20	0.15	0.10	0.30
	Indifference (q)	9000.00	20.00	$ 7,000,000.00	0.01	15.00
	Preference (p)	12000.00	30.00	$ 10,000,000.00	0.02	30.00
	Veto (v)	20000.00	365.00	0.00	0.00	0.00

c_{j} (a, b) = \{\begin{matrix} 1, i f g_{j} (a) + q_{j} \geq g_{j} (b) \\ 0, i f g_{j} (a) + p_{j} \leq g_{j} (b) \\ \frac{p_{j} + g_{j} (a) - g_{j} (b)}{p_{j} - q_{j}}, o t h e r w i s e \end{matrix}; j = 1, \dots, n

d_{j} (a, b) = \{\begin{matrix} 1, i f g_{j} (a) + v_{j} \leq g_{j} (b) \\ 0, i f g_{j} (a) + p_{j} \geq g_{j} (b) \\ \frac{g_{j} (b) - g_{j} (a) - p_{j}}{v_{j} - p_{j}}, o t h e r w i s e \end{matrix}; j = 1, \dots, n

σ (a, b) = \{\begin{matrix} C (a, b), i f d_{j} (a, b) \leq C (a, b) \forall j \\ C (a, b) ∙ \prod_{j \in J (a, b)} \frac{1 - d_{j} (a, b)}{1 - C (a, b)} \end{matrix} .\} J (a, b) is the set of criteria such that d_{j} (a, b) > C (a, b)

[1] *Corresponding author

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RANKING OF A SET OF ACCOUNTS RECEIVABLE STRATEGIES IN A MEXICAN REGIONAL COMPANY BASED ON A MULTICRITERIA APPROACH

ABSTRACT