operational audit on accounts receivable (a case …

OPERATIONAL AUDIT ON ACCOUNTS RECEIVABLE

(A Case Study of PT Yamazaki Indonesia)

SKRIPSI

Presented in partial fulfillment of the requirements for

The Bachelor’s Degree in Accounting

By

Jose Bonifacio Pakpahan

008201500012

FACULTY OF BUSINESS

ACCOUNTING STUDY PROGRAM

PRESIDENT UNIVERSITY

CIKARANG, BEKASI

2019

ii

PLAGIARISM CHECK RESULT



v

DECLARATION OF ORIGINALITY

I hereby declare that the thesis entitled:



It is true of my own work or not plagiarism of the work of other. If in the future

proved that this scientific work is not my own work or plagiarism of the work of

others, then I am willing to accept sanctions in accordance with applicable laws

and regulations.

Cikarang, 17 December 2018

Jose Bonifacio Pakpahan

vi

PANEL OF EXAMINERS APPROVAL



Submitted by Jose Bonifacio Pakpahan, Accounting Study Program, Faculty of

Business, has been assessed and proved to pass the oral examination held on 9

January 2019.

Panel of Examiner,

Advisor,

Drs. Gatot Imam Nugroho,MBA.,CA

Examiner 1,

Examiner 2,

Andrianantenaina Hajanirina, BA.,

B.Sc.,M.Sc.,MM.

Mila Reyes BSBA.,CPA.,MBA.

Approved By

Date:………………………………

Andi Ina Yustina, M.Sc., CMA.

Head of Study Program

vii

ACKNOWLEDGEMENT

These are the best supporters that I ever have since the very beginning of

this Skripsi process. I realized that without them I would never accomplish every

single step until I reach this phase of life. They deserve all my gratitude.

1. My Father, Jesus Christ, thank You for Your love, strength and guidance

from the very beginning of my life up until now. Thank you for never letting

me down, for every tear you have turned into joy, for every single

opportunity that you entrusted to me. You have done a lot for me. This

skripsi is fully dedicated to You.

2. Papa and mama, there are not enough words to describe how thankful I am

for both of you. I know I don't show how grateful I am enough, but I really

am. You both have taught me so much, and going away to college and being

apart from you has made me realize how much you both mean to me.

Distance means nothing; since both of you are something precious for me.

Thank you for always being there for me. Without the two of you, I don't

know where I would be. I realize I do not thank you enough for everything.

And for that, I apologize. If I have learned anything while being away from

you, it is that you are the most important people in my life, and I love you

both more than anything. So, mom and dad... Thank you. For everything. I

promise I will work hard to make you proud.

viii

3. My brother and my sister, Juan Benedict and Arthia Josephine. I look up to

you in so many ways, and you inspire me more than you could ever imagine.

I know, I was once the annoying little brother who got everything you guys

wanted, and you were the mean big brother and sister who always picked on

me (if we’re being honest, you still do), but now that we are older and

somewhat more mature, I realize how lucky I am to have an older siblings. I

know I’m lucky to have you guys, and even luckier to have one that I’m so

close to. I couldn’t imagine life without you, and I wouldn’t want to. Thanks

for not only being my bro and sis but also being the greatest friend I could

ever ask for. I'm so proud to call you my big bro and sis.

4. My brother from another mother, bang Daniel Tommy Tambunan. Thank you

for having me in your company to conduct this research. Thank you for every

help you gave to me, you’re like a living savior for my skripsi. I’m glad that I

did ever spent some times in eating Indomie, playing badminton, sleep

together, playing Mobile Legends (the combination of Harith/ Gord and

Rafaela) and most importantly, working together as a team in the last

Company Dinner of PT Yamazaki Indonesia with a person like you. Thank

you for the opportunity and I feel really honored for that.

5. My advisor, Drs. Gatot Imam Nugroho, Ak., MBA., CA. Thank you for your

time, guidance and advices for me in doing this skripsi. Semangat sir

nyalegnya! Saya doain terus!

ix

6. Pak Frans, Pak Jun, Ka Rischa. Thank you for entrusting me in conducting

the research in PT Yamazaki Indonesia; it was a really expensive and great

experience.

7. My lovable friends in PT Yamazaki Indonesia, bang Hendra, bang Niko, Pak

Agung, ka Depi, bang Restu, Ius, pak Budi, ka Rachma, nci Shella, bu Fanny,

ka Dwi, Okky, Indri, ka Ganis and bu Nasha. THANK YOU VERY MUCH

FOR ALL OF THE DATAS GIVEN TO ME! WORKING IN YAMAZAKI

WAS AN EXCITEMENT FOR ME! SEE YOU ON TOP GUYS! I WILL

MISS YOU ALL. THANK YOU SO MUCH.

8. Thank you Mami Tari, for the love you gave to me during my research in PT

Yamzaki Indonesia. I will surely miss your panic expression.

9. Thank you pak Untung for the kuah soto 3 ribu that we eat together with pak

David, ka Hendra and bang Tommy. You’re surely is the funniest guy I’ve

met. I will really miss eating “soto pak Untung” together.

10. My dear skripsi survivor and a roommate of mine, Fredrik Wijaya. Thanks

for making all the way of this semester colorful by all your jokes and

encouragement. I wish you have a great career ahead and success in your

thesis defense as well. I’m sorry if I snore to loud, hehehe.

11. Komsel KomBaWa, for my partners Agatha, Fanya, Daniel, Iki, Nabila and

Feli. Thank you so much for the encouragement throughout these 2 years of

serving as Kakak Komsel together. You guys will always have a special part

in my heart. For Gilbert, Rida, Fidel, Angie and Fidel, thank you for asking

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me “kapan sidang ko?” every single day we met and all prayers. It boosts up

my spirit. Wishing you all has a great phase on your university life.

12. My dearest friend Sonia. Thank you for reminding me of my things, cheering

me up when I’m down, and supporting me through the process of completing

this skripsi. You may think that you did nothing great, but for me, all those

“nothing great” means world to me. Now that we are apart means that we

have to be more responsible with our activities! Good luck in completing

your college life. Thank you for everything and God bless you and family.

13. Fredrik Wijaya and Ignasius Dymas, my classmates. Thank you for being a

great mate in class and also being a great supporter of mine. I wish you all a

great success on your skripsi and defense along with your career path ahead.

14. Community of Love President University. I have no regret of joining this

family. Thank you for letting me to be a part of this family and for every

opportunity given to me to serve Him through this community. I am blessed

beyond measure. Thank you for being a great supporter. May the light will

always shine in this community. Let all the glory just for Him.

15. My chit chat mates, Amsal 17:17 members. For Jovaldi, Refo, Moses,

Jeremy, Joshua, and Holy, thank you for lots of laughs, supports, and prayers.

I wish you guys a great study and career path ahead.

16. All examiners, I am not able to cross this path without you.

17. All Accounting lecturers and friends. You made up my university life. Thank

you for everything.

xi

I do realize that this skripsi is far from the perfection and I would never be

able to have it done without those great people and every one that I may not able

to mention one by one. I hope that this research will be valuable and useful for

future users.

Jose Pakpahan

The Researcher

xii

RECOMMENDATION LETTER FROM THESIS ADVISOR

This thesis is prepared and submitted by

Name : Jose Bonifacio Pakpahan

Student ID : 008201500012

Faculty : Business

Study program : Accounting

Field of study : Managerial Accounting

Thesis title : OPERATIONAL AUDIT ON ACCOUNTS

RECEIVABLE (A Case Study of PT Yamazaki

Indonesia)

Has been reviewed and found to have satisfied the necessities for oral defenseas

partial fulfillment of the requirements for the Bachelor’s Degree in Accounting.

Cikarang, 17 December 2018

Bekasi, Indonesia

Acknowledged by:

Head of Study Program Thesis Advisor

Andi Ina Yustina, M.Sc., CMA. Drs. Gatot Imam Nugroho,MBA.,CA

xiii

TABLE OF CONTENTS

SKRIPSI ............................................................................................................................ i

PLAGIARISM CHECK RESULT ................................................................................ ii

DECLARATION OF ORIGINALITY ......................................................................... v

PANEL OF EXAMINERS APPROVAL ..................................................................... vi

ACKNOWLEDGEMENT ............................................................................................ vii

RECOMMENDATION LETTER FROM THESIS ADVISOR ............................... xii

TABLE OF CONTENTS ............................................................................................. xiii

LIST OF TABLES ....................................................................................................... xvi

LIST OF FIGURES .................................................................................................... xvii

LIST OF APPENDICES.............................................................................................. xix

CHAPTER I: INTRODUCTION .................................................................................. 1

1.1 Background.............................................................................................................. 1

1.2 Problem Formulation ............................................................................................... 5

1.3 Benefits of Research ................................................................................................ 5

1.4 Scope and Limitations of Research ......................................................................... 6

CHAPTER II: LITERATURE REVIEW ..................................................................... 8

2.1 Introduction ............................................................................................................. 8

2.2 Account Receivables Management ......................................................................... 8

2.3 Account Receivables Turnover ............................................................................. 10

xiv

2.4 Aging Schedule ..................................................................................................... 11

2.5 Bad Debt and Allowance Provision ...................................................................... 13

2.6 Factors Affecting the Amount of Receivables ...................................................... 13

2.6.1 Percentage of Credit Sales .............................................................................. 14

2.6.2 Stuck Billing Customer ................................................................................... 14

2.6.3 Billing Business .............................................................................................. 14

2.7 Variables Affecting Receivables ........................................................................... 15

2.8 Receivable Billing ................................................................................................. 16

2.9 Policy for Uncollectible Accounts Receivable ...................................................... 16

CHAPTER III: METHODOLOGY ............................................................................ 17

3.1 Research Framework ............................................................................................. 17

3.2 Location and Time of Research ............................................................................. 20

3.3 Data Collection ...................................................................................................... 20

3.4 Processing and Data Analysis ............................................................................... 20

3.4.1 Analysis per Component ................................................................................. 21

3.4.2 Trend Analysis ................................................................................................ 22

3.4.3 Cash Conversion Cycle Analysis .................................................................... 23

3.4.4 Analysis of Company’s Financial Ratio ......................................................... 24

CHAPTER IV: RESULTS AND DISCUSSION ........................................................ 25

4.1 Account Receivable Management in PT Yamazaki Indonesia ............................. 25

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4.2 Factors Affecting the Amount of Receivables at PT Yamazaki Indonesia ........... 27

4.3 Account Receivable Management Process in PT Yamazaki Indonesia ................ 39

4.4 Debt Collection Procedure .................................................................................... 43

4.5 Trend Analysis....................................................................................................... 44

4.6 Cash Conversion Cycle Analysis .......................................................................... 48

4.7 Financial Ratio Analysis........................................................................................ 51

4.7.1 Activity Ratio .................................................................................................. 51

4.8 Managerial Implications ........................................................................................ 54

4.9 Findings ................................................................................................................. 55

4.9.1 Insufficient and Ineffective Number of AR Employees ................................. 55

4.9.2 Recording of Accounts Receivable that are Still Incomplete ......................... 56

4.9.3 Provision ......................................................................................................... 57

4.9.3 Over Sales Returns.......................................................................................... 58

CHAPTER V: CONCLUSION AND RECOMMENDATION ................................ 60

5.1 Conclusion ............................................................................................................. 60

5.2 Recommendation ................................................................................................... 61

REFERENCE ................................................................................................................ 62

APPENDICES (INTERVIEW) .................................................................................... 65

APPENDICES (DOCUMENTATION) ....................................................................... 69

xvi

LIST OF TABLES

Table 1 Analysis per Component of Balance Sheet (Partial) .......................................... 26

Table 2 Cash Conversion Cycle Analysis ....................................................................... 27

Table 3 Trend Analysis of Some Balance Sheet and Profit and Loss Accounts............. 29

Table 4 Some Balance Sheet and Profit and Loss Accounts .......................................... 29

Table 5.1 PT Supra Boga Lestari’s July Aging Schedule ............................................... 30

Table 5.2 PT Supra Boga Lestari’s July Aging Schedule (New Orders) ........................ 30

Table 6.1 PT Fajar Mitra Indah’s July Aging Schedule.................................................. 31

Table 6.2 PT Fajar Mitra Indah’s July Aging Schedule (New Order) ............................ 31

Table 7.1 PT Lion Super Indo’s July Aging Schedule.................................................... 31

Table 7.2 PT Lion Super Indo’s July Aging Schedule (New Order) .............................. 31

Table 8.1 PT Naga Swalayan’s July Aging Schedule ..................................................... 31

Table 8.2 Naga Swalayan’s July Aging Schedule (New Order) ..................................... 31

Table 9.1 Supra Boga Lestari’s August Aging Schedule ................................................ 32

Table 9.2 Supra Boga Lestari’s August Aging Schedule (New Order) .......................... 32

Table 10.1 PT Fajar Mitra Indah’s August Aging Schedule ........................................... 32

Table 10.2 PT Fajar Mitra Indah’s August Aging Schedule (New Order) ..................... 33

Table 11.1 PT Lion Super Indo’s August Aging Schedule ............................................. 33

Table 11.2 PT Lion Super Indo’s August Aging Schedule (New Order) ....................... 33

Table 12.1 PT Naga Swalayan’s August Aging Schedule .............................................. 33

Table 12.2 PT Naga Swalayan’s August Aging Schedule (New Order) ........................ 33

Table 13.1 PT Supra Boga Lestari’s September Aging Schedule .................................. 34

Table 13.2 PT Supra Boga Lestari’s September Aging Schedule (New Orders) ........... 34

xvii

Table 14.1 PT Fajar Mitra Indah’s September Aging Schedule ..................................... 34

Table 14.2 PT Fajar Mitra Indah’s September Aging Schedule (New Order)................ 34

Table 15.1 PT Lion Super Indo’s September Aging Schedule ....................................... 34

Table 15.2 PT Lion Super Indo’s September Aging Schedule (New Order).................. 34

Table 16.1 PT Naga Swalayan’s September Aging Schedule ........................................ 35

Table 16.2 Naga Swalayan’s September Aging Schedule (New Order) ........................ 35

Table 17.1 Supra Boga Lestari’s October Aging Schedule ............................................ 35

Table 17.2 Supra Boga Lestari’s October Aging Schedule (New Order) ....................... 35

Table 18.1 PT Fajar Mitra Indah’s October Aging Schedule ......................................... 35

Table 18.2 PT Fajar Mitra Indah’s October Aging Schedule (New Order) .................... 36

Table 19.1 PT Lion Super Indo’s October Aging Schedule ........................................... 36

Table 19.2 PT Lion Super Indo’s October Aging Schedule (New Order) ...................... 36

Table 20.1 PT Naga Swalayan’s October Aging Schedule............................................. 36

Table 20.2 PT Naga Swalayan’s October Aging Schedule (New Order) ....................... 37

Table 21 Trend Analysis of Some Balance Sheet and Profit and Loss Accounts........... 48

Table 22 PT Yamazaki Indonesia Cash Conversion Cycle Analysis ............................. 49

Table 23 PT Nippon Indosari Corpindo Cash Conversion Cycle ................................... 49

Table 24 PT Yamazaki Indonesia Activity Ratio ........................................................... 53

Table 25&26 Numbers of Invoices Were Made in 2017 & 2018 ................................... 56

Table 27&28 AR Balance Sheet Record of PT Yamazaki Indonesia 2017&2018 ......... 56

Table 29 Statements of Financial Position ...................................................................... 58

Table 30 Data Return ...................................................................................................... 59

xviii

LIST OF FIGURES

Figure 1 Accounts Receivable Ratio (Investopedia) ....................................................... 10

Figure 2 Traditional Aging Schedule .............................................................................. 12

Figure 3 Research Framework ........................................................................................ 19

Figure 4 Accounts Receivable Business Process (Created by the Researcher) .............. 42

Figure 5 – Descriptive Statistics for FMCG and Airline Industry .................................. 50

xix

LIST OF APPENDICES

APPENDICES (INTERVIEW)

Appendix 1 – Engagement with Director, Manager & Supervisor ................................. 65

Appendix 2 – Interview with Accounts Receivable (Supervisor) ................................... 66

APPENDICES (DOCUMENTATION)

Appendix 1 – Invoice ...................................................................................................... 69

Appendix 2 – Proof of Receipt of Goods (Bukti Terima Barang) .................................. 70

Appendix 3 – Payments .................................................................................................. 71

Appendix 3.1 – Voucher Receipt ............................................................................. 71

Appendix 3.2 – Invoice Receipt (Tanda Terima Faktur) ......................................... 72

Appendix 3.3 – Invoice Receipt (Compiled) ........................................................... 73

Appendix 4 – Delivery Notes .......................................................................................... 74

Appendix 5 – Goods Received Receipt .......................................................................... 75

Appendix 6 – Tax Invoice ............................................................................................... 76

Appendix 7 – Company Acceptance Letter .................................................................... 77

Appendix 8 – Company’s Confirmation Letter .............................................................. 78

Appendix 9 – The Researcher with Mr. Frans (Director) ............................................... 79

Appendix 10 – The Researcher with Mr. Karno (HRGA General Manager) ................. 79

Appendix 11 – The Researcher with Fin/Acc/Mar/Dis Staff .......................................... 80

Appendix 12 – The Researcher with Mr. Furumi (Director) .......................................... 80

Appendix 13 – The researcher with Mr. Ichiro Saito (President Director) ..................... 81

xx



ABSTRACT

PT Yamazaki Indonesia is one company whose entire business activities or

sales are carried out on credit. The company carries out sales activities based on

policies set by the company (verbal). The applied credit policy is expected to be

able to provide optimal benefits and be able to increase customer satisfaction.

This is due to the high level of credit sales risk, which requires companies to carry

out all sales procedures based on their credit policies. This study aims to

determine the accounts receivable management system run at PT Yamazaki

Indonesia, analyze the factors that affect the size of PT Yamazaki Indonesia's

receivables, and analyze the effectiveness of controlling receivables against cash

flows. The results of this study indicate that based on an analysis of the accounts

receivable management system, PT Yamazaki Indonesia has carried out the

management, and control of accounts receivable based on the verbal SOP

(Standard Operation Procedure) that has been set by the company, but there are

still some things that are not implemented. Factors that influence the amount of

receivables are the percentage of credit sales, stuck billing customer, and effort of

billing. PT Yamazaki Indonesia has a large amount of receivables in the balance

sheet, mainly influenced by the large percentage of credit sales and effort of

billing undertaken. Based on the analysis of financial performance in the

company's financial statements for the period of 2016 - 2017, it shows that the

company still has good financial performance. This is indicated by a number of

positive financial ratios. Accounts receivable control carried out by PT Yamazaki

Indonesia has not been effective against the company's cash collection. This is

evidenced from the results of the cash conversion cycle analysis which is less than

the average value of the FMCG industry and means that the amount of

receivables owned is not good enough to be converted into cash (if compared with

FMCG industries) due to the existence of inhibiting factors such as collection and

not properly applied credit analysis to all customers.

Keyword: Accounts Receivable, Allowance for Doubtful Accounts, Provision,

financial performance, Accounts Receivable Management.

1

CHAPTER I

INTRODUCTION

1.1 Background

One of the purposes of setting any business is to maximize profit; hence

sales revenue will improve the profitability of that company. Selling by cash is

the most ideal way of improving cash inflow but at times a company must sell

on credit which is normally termed as trade credit. Effective receivables

management and the ability of a company to collect the credit must be the

prerequisite of selling on credit otherwise it will affect the liquidity and the

condition of the company. As suggested by Paramasivan and Subramanian

(2009) most businesses sell on credit or by cash. Irrespective of best efforts of

organizations to do effective credit assessment it is difficult to avoid credit

problems as indicated by Kimmel et al. (2011). Burt (2004) reaffirmed the

essence of comprehensive credit assessment of customers.

In a company, especially a manufacturing company, financial management

has an important role in a company's management function. When the company

conducts its sales system on credit, then the receivables will arise. This will

have an effect on the company's financial statements, especially the impact on

cash flows. As for a problem that often occurs is when consumers are negligent

in making payments. This will have an impact on the company, namely the

delay in repayment of accounts receivable and the company's cash flow will

decrease so that it affects the effectiveness of the company's operations.

2

Cash Conversion Cycle is an analysis that uses an approach that company

goals to minimize working capital provided that the working capital must be

sufficient to finance the company's operations. The process of minimizing

working capital is done by accelerating the collection of cash from sales,

increasing inventory turnover, and reducing spending with cash (Keown,

2010).

PT Yamazaki Indonesia is one of the companies where all business

activities or sales are carried out on credit. The company carries out sales

activities based on policies set by the company (verbal). The applied credit

policy is expected to be able to provide optimal benefits and be able to increase

customer satisfaction. This is due to the high level of credit sales risk that

requires companies to carry out all sales procedures based on their credit

policies.

The company carries out sales procedures based on its credit policies

because it relates to the characteristics of products sold, which are related to the

quality of products that provide a guarantee within the specified time limit, so

consumers will usually get a purchase return when the product used does not

match the expected performance. The purchase returns made by consumers will

have an impact on the receipt of receivables that will be paid by consumers to

the company. Therefore, in a company there needs to be a good debt control

system in order to be able to manage its finances and continue to operate to

meet market demand and maintain customer loyalty and trust.

3

According to Fabozzi and Peterson (2003) whenever a company decides to

sell to customers on credit it creates accounts receivables. Repayment of debt is

critical for the liquidity position of any company, for it is important for debtor

and creditor to agree on how the debt will be settled before the debt must be

granted as advised by Finlay (2008). In management of debtors, it is imperative

to ensure that repayment of the credit sale is done within the agreed period and

most importantly with the minimum administrative cost to the company as

suggested by Paramasivan and Subramanian (2009). Specific industry and kind

of customers can influence a company to consider credit sales. In managing

receivables among others there must be consideration in the following as

suggested by Mecklin (2007) such as creditworthy of the customer, monitoring

of debt, and sanction plan for defaulters, a policy on bad debt and possibly

factoring the debt.

Credit policy must contain a detailed procedure for granting credit and its

repayment as suggested by Burt (2004). Reuvid (2010) explained that credit

policy must guide credit management and more so ensure that there is a

balance between a liberal and stricter credit. Brigham and Ehrhardt (2011)

reaffirmed that credit policy must have captured credit terms, period for

payments and policy on the debt collection. Credit policy guides credit

management and must include credit terms and standards with debt collection

approach as advised by Burt (2004). Brealeyet al. (2011) recommended that in

dealing with debtors, companies must establish the following: assessment of

4

the credit worthiness of the customer, credit terms and effective collection

procedure.

Watson and Head (2013) stressed that the expenses of debt collection must

not surpass the amount to be recover. Paramasivan and Subramanian (2009)

indicated that it will make a business sense if companies can charge interest on

overdue repayment by customers to push them to pay on time. Kimmel et. al.

(2011) pointed out that there is the need for a company’s collection policy but

without efficient system of debt collection in place it will affect repayment on

time negatively. Watson and Head (2013) recommended that it is important for

companies to get it right between strict collection policy and the real benefits

ensuing from a decent management of credit. Brealeyet. al., (2011) suggested

that smaller companies without specialized credit department can hire debt

collection agents to help them in that direction.

Adelman and Marks (2014) recommended that factoring is an option

business can use to get their money back if it is becoming difficult to recover

the debt through the internal systems. Brigham and Ehrhardt (2011) indicated

that as much as there is the need of credit policy for a company without

effective monitoring system to check the observance of the credit policy

repayment of the credit can be delayed or will not be paid at all. Effective

follow-up measures on the debtors list of a company does not only enhances

the opportunity of getting the money on time it also put the debtors on their

alert to fulfill repayment on time as suggested by Kimmel et. al. (2011) and

5

Burt (2004). This paper examines accounts receivable management of PT

Yamazaki Indonesia

1.2 Problem Formulation

PT Yamazaki Indonesia is a company that has not long been established

(only 4 years) and is not very experienced in running its business. In its

implementation, the company is still experiencing problems with the collection

of receivables. The company has customers of up to 180 companies, which

shows that the company has been highly trusted and is able to provide products

according to customer demand but without a good management this could

possibly become a boomerang to the company. The formulation of the problem

in this study, namely:

1. How does the receivable management system run at PT Yamazaki

Indonesia?

2. What factors influence the amount of receivables of PT Yamazaki

Indonesia?

3. What is the Account Receivable performance of PT Yamazaki Indonesia in

the period 2015 – 2017?

1.3 Benefits of Research

The results of this study are expected to provide value and benefits to

various parties in need, especially for the company, such as consideration in

6

implementing the system of controlling accounts receivable and in the

decision-making process relating to the policy of accounts receivable. In

addition, this research is also expected to be used as a reference or guideline for

further research.

1.4 Scope and Limitations of Research

When conducting research, researchers only discuss the system of

controlling accounts receivable related to the effectiveness, efficiency and

accuracy. This is obtained from an analysis of the accounts receivable control

system that has been carried out and analysis of receivables held by the

company in the period 2015-2017.

This study presents the new evidence of receivables management impact

on the firm financial collectability performance, which is done by analyzing the

trend, data given by PT Yamazaki Indonesia from 2015 – 2018. The relevance

on the impact of receivables management on the firm performance, specifically

on firm financial collectability performance which in reality is still lagging.

Hence, this study attempts for broadening the research to a deeper level of

receivables management.

This research is expected to be beneficial for the readers and broaden the

point of view for both the other researcher and also the management of PT

Yamazaki Indonesia and to go beyond the other factors that may affect account

management collection performance. This research is mainly focused on the

analysis of account receivables management in PT Yamazaki Indonesia.

7

The rest of this skripsi is organized as follows. In the next chapter, that is

literature review section, the researcher will explain more about the variables

and the research done by other researcher which will be used as the basis for

reference of the study. The methods used to investigate and gather the data are

in chapter 3. The results of this study along with the discussion are outlined in

chapter 4, and the conclusion of all this skripsi will be provided in the chapter

5.

8

CHAPTER II

LITERATURE REVIEW

2.1 Introduction

This section will explain more about the variables and the research done

by other researcher which will be used as the basis for reference of the study, such

as the Account Receivables Management, Account Receivables Turnover, Aging

Schedule, Bad Debt and Allowance Provision and etc. This section will give a

clear picture about the definition of those variables, the theory being used for this

research, along with the research gaps in this study.

2.2 Account Receivables Management

If we derive a definition of an account from the AMA Dictionary of

business and management, it is defined as a statement of transaction. The

definition stated in AMA Dictionary actually relates to the definition of

accounts receivable which is defined as an amount owed to a business by

customers for invoice amounts (transactions) classified as current accounts in

the balance sheet. Many companies sell credit in order to sell more products or

services. Receivables arising from such sales are usually classified as trade

accounts receivable or notes receivable. The term receivables include all claims

in the form of money against other parties, including individuals, companies, or

other organizations. Receivables usually have a significant share of the

company's total current assets (Warren, 2005).

9

A company manages its receivables depending on what the company sells

on credit. The more that is sold on credit, the higher the proportion of assets

related to receivables. As a result, when discussing the management of

accounts receivable, it is actually also discussing one fifth of the company's

assets. In addition, because the cash flow from the sale cannot be invested until

the receivables are paid, control of the receivables becomes increasingly

important. The efficient billing determines the profitability and liquidity of the

company (Keown, 2010).

Managers and external users of financial statements need to measure how

efficiently a company uses business assets or operating assets, especially

elements of certain working capital such as accounts receivable, inventory, and

trade payables. The most common relationship commonly used to monitor

accounts receivable is the average billing period (Stice, 2004).

The importance of a good debt management provides an impact on the

company's financial statements and can then show a company's performance.

According to Warren (2005), relating to the process of controlling accounts

receivable, companies attempt to limit the value of uncollectible receivables by

implementing various control devices. The most important controls are related

to the function of credit approval. This control involves investigating the

customer's credibility. The two accounting methods for recording receivables

that are not expected to be collected, which are the allowance method and the

direct write-off method. Seeing this, the role of financial managers is very

10

influential in the management of accounts receivable which is closely related to

the overall financial condition of the company.

2.3 Account Receivables Turnover

The Account receivables turnover ratio shows how many times a company

pays off its average accounts receivable within a given period of time, it could

be monthly or yearly basis (Investopedia, 2017). The account receivables

turnover ratio is an activity ratio used by management to understand how a

company handles the collection of payments owed to the business. If the

accounts receivable turnover ratio declines from one year to the next, it may

signal a company's collections department is unable to collect from older

customers or the company has an excessive amount of debt. If the account

receivables turnover ratio increases from one year to the next, it may be a sign

of an aggressive collections department or a conservative credit policy on the

part of the company. The formula to calculate the ratio is:

Figure 1 Accounts Receivables Ratio (Investopedia)

Accounts Receivable Turnover

Accounts Receivable

Turnover =

Beginning + Ending AR

Average AR

Average Accounts

Receivable (AR) = 2

Net Sales

11

2.4 Aging Schedule

The Accounts Receivable (A/R) Aging Schedule, also known as a

Schedule of Accounts Receivable, allows a company or entities to analyze the

accounts receivable due to the company from the customers engaged. It

provides general information, at a point of time, on which the companies are

expecting payment from and can also assist with determining the likelihood of

collection. As accounts become more aged, their collectability becomes less

certain (BMO, 2016).

The Aging Schedule is a popular accounts receivable tool (Pike and

Cheng, 2001) and is widely referred to in the normative accounting and finance

literature (Peacock, et.al., 2003; Arnold, 2005). It comprises a classification of

outstanding balances according to the period of time they have been

outstanding (Equation 1).

These age categories can be calibrated according to months, weeks, or

days, depending on an organization’s requirements, and are frequently

expressed as a percentage relative to the total accounts receivable balance

(Lewellen and Johnson, 1972; Lewellen and Edmister, 1973; Zeune, 1991). If

debts are collected on time, most debts should be younger, and few should be

older. It is assumed that increased collection efficiency would reduce the

percentage of debt in the older categories.

12

Figure 2 Traditional Aging Schedule

The Aging Schedule is usually expressed in percentages, with the total of

all categories equaling 100 percent. This calculation signifies that all categories

must change when any accounts receivable category is altered. As Zeune

(1991) notes: “Percentages are interdependent. They must always sum to

100%.” This interdependence creates a challenge when attempting to interpret

a change in a particular category (Benishay, 1965; Lewellen and Johnson,

1972; Lewellen and Edmister, 1973; Zeune, 1991).

This problem of interdependency in an Aging Schedule is most apparent

when changes in credit sales occur. Rising credit sales will result in a schedule

exhibiting increasing values in the younger categories, and a misleading

suggestion of increased collection efficiency for the older categories (Lewellen

and Johnson, 1972; Lewellen and Edmister, 1973; Zeune, 1991). Lewellen and

13

Edminster (1973) argue that it is only in periods of evenly occurring credit

sales that an Aging Schedule can be seen to represent a tool that accurately

depicts collection efficiency. Zeune (1991) and Lewellen and Johnson (1972)

conclude that the Aging Schedule produces an incorrect analysis and false

warning patterns can be raised by normal sales fluctuations. One can conclude

that the sum of credit sales achieved in the most recent 30-day period is

positively correlated to the current category in a traditional Aging Schedule.

2.5 Bad Debt and Allowance Provision

If collectability is probable at the outset, but subsequently facts and

circumstances change such that collection from the customer is no longer

probable, the amount of the debt deemed to be uncollectible should be written

off as a bad debt expense or the company should provide a bad debt provision

for the account, as it is appropriate. Contingences, provides guidance to

determine if it is probable that amounts will or will not be collected. The

company should account for any impairment of its existing receivable.

2.6 Factors Affecting the Amount of Receivables

Manufacturing companies are companies that have business or business

activities from the start of production operations to the sales of products

produced. Manufacturing companies that carry out sales activities on credit will

14

get additional assets in the current assets, which are marked by the emergence

of receivables. Then the receivables that have arrived at maturity, then cash

flow occurs. According to Keown (2010), the factors that influence the size of

investment in receivables are:

2.6.1 Percentage of Credit Sales

The greater the sales on credit, the greater the receivables that will be

obtained. When a company experiences sales growth, the level of investment in

accounts receivable will also go up.

2.6.2Stuck Billing Customer

Determining the type of customer is a decisive variable in seeing customer

qualifications in obtaining credit. When a company receives customers who

are less creditworthy, it will result in a default.

2.6.3Effort of Billing

The key to maintaining control over receivable billing is the fact that the

probability of default is increasing with the age of the bill. Control over

receivables is focused on the control and elimination of receivables that are

past due. Strength and timeliness of billing will affect the period of bills that

are due but still negligent to pay.

15

2.7 Variables Affecting Receivables

According to Jusuf (2005) internal variables are variables (factors) that are within

the control of the company. While external variables are variables (factors) that are

outside the company and the company does not have the ability to control these factors

at all. Internal variable are company policies related to accounts receivable consisting

of:

a. Sales

The greater the sales in credit, the greater the profitability. But if credit

sales are limited, the company is more concerned with credit safety.

b. Doubtful Accounts

If the greater the amount of the receivables, the greater the possibility of

uncollectible accounts.

c. Sales Return

When PT Yamazaki sales are dominated with return, then there will be a

high chance of Deductive Receivable and Revenue.

2.8 Receivable Billing

There are several techniques that can be used to increase billing on receivables

that are due. The cheapest billing is by phone and mail (Maya, 2005). Billing

techniques include:

• Sent a letter

• On the phone

16

• visited

• Using agents / other people (debt collector)

The company can use the person or the State Auction and Receivable

Affairs Agency (BUPLN) or Legal actions or civil claims

Credit insurance is formed with the intention to protect manufacturers,

retailers, service companies and other companies against unexpected credit

losses. In collection of accounts receivable, financial managers must determine

the average billing time that can be received or the level of outstanding sales

days as well as the ratio of total uncollectible receivables to total operating

revenues made.

2.9 Policy for Uncollectible Accounts Receivable

Strength and timeliness of billing will affect the period of bills that are due

but still negligent to pay and will affect the amount of receivables (Keown,

2010). The company has the possibility to obtain funding sources easily and

quickly up to 80% of the value of its sales invoice on credit, namely through

factoring (Siamat, 2005). The definition of factoring company based on the

Minister of Finance Decree No. 1251 / KMK.013 / 1988 is a business entity

that carries out financing activities in the form of purchases and / or transfers

and management of short-term receivables or bills of a company from domestic

or foreign trade transactions.

17

CHAPTER III

METHODOLOGY

3.1 Research Framework

PT Yamazaki Indonesia is one of the manufacturing companies that

entirely do credit sales activities. When a company conducts sales activities on

credit, there is a receivable for the company. The company certainly tries to

manage its receivables properly so that the company's cash flow statement is

also in good condition. By analyzing the factors that affect receivables, then it

can also analyze financial ratios obtained from the balance sheet, and Profit and

Loss statement. After that, the analysis will be carried out per component to see

the proportion of the amount of receivables contained in the balance sheet

report and then see how much influence the amount of receivables the company

has on the effectiveness of collection. The cash conversion cycle analysis is

used to see the effect of controlling accounts receivable on the effectiveness of

collection and to minimize a working capital which will then be used in

financing the company's operating activities, so that a good turnover between

inventory, cash and receivables will be seen in operating company.

PT Yamazaki Indonesia is a manufacturing company that also accepts

payment transactions in foreign currency. This is evidenced by the presence of

several consumers who make receivable payment transactions using foreign

currency units. In addition, the company also purchases raw materials from

18

foreign suppliers. This will be affected by fluctuating currency exchange rates

and impact on receivables which fluctuate as well.

The results of the analysis carried out in this study are expected to help the

company run its debt control system properly, because it will be related to sales

patterns that also affect the company's liquidity. A clearer understanding can be

seen in Figure 3, in the next page.

19

Figure 3 Research Framework

20

3.2 Location and Time of Research

This research was conducted at PT Yamazaki Indonesia which is located in

Kawasan Industri Greenland Batavia Blok BA No.1, Ds Cikarang Pusat,

Sukamahi, CikarangPusat, Bekasi, Jawa Barat 17530. The choice of research

location was done intentionally or purposively. This research was conducted in

September–December 2018.

3.3 Data Collection

This research collects data directly from the company both primary and

secondary data. Primary data is obtained from interviews with the company,

especially financial managers, regarding the control system of receivables and

the decision-making process related to the receivable policy. Secondary data

was obtained from company in the form of financial statements for the 2015 –

2017 period, sales data, Aging Schedule data, Listing Invoices Data, Balance

Sheet Data, Profit and Loss data, etc. for the period 2017 – 2018, literature

studies, and research reports.

3.4 Processing and Data Analysis

This study obtained data directly from the company and then processed

and analyzed by statistical methods, namely analysis per component, trend

analysis, cash conversion cycle analysis, and financial ratio analysis. Analysis

per component is used to see the proportion of the amount of receivables

contained in the balance sheet report and then see how much influence the

21

amount of receivables held by the company on the effectiveness of collection.

Trend analysis is used to analyze the comparison between the amount of

receivables and sales made by the company. Cash conversion cycle analysis is

used to see the effect of controlling receivables on the effectiveness of

collection and to minimize working capital owned by a company by

accelerating the collection of cash from sales, increasing inventory turnover,

and reducing spending with cash. Financial ratio analysis is used to see the

company's financial performance in each period. In addition, computer

software that will be used to process and analyze data is Microsoft Excel 2007.

3.4.1 Analysis per Component

According to Jumingan (2008), the analysis per component is percentage

of each asset element to total assets, each element of liability to the total

liability, and each element of profit and loss on the amount of net sales. Such

reports called the common size statement. General size statements are also

called quantities per component because for each total replaced with the

number 100 and each nothing changes to a percent of the total number.

Analysis per component is actually also a ratio analysis (comparison) or some

sorts of proportion, because of the amount of rupiah from each element of the

financial statements are expressed in percent of the total. The method changes

the amount of rupiah from each report element to percent of the total, done as

follows:

22

1. State the total assets, total liabilities, and total net sales with100%.

2. Calculate the ratio of each element of the financial statement with the total

is by dividing the rupiah amount of each element the financial statements in

total.

3. Percentage analysis per component can be formulated as follows:

Information:

Ryi = The percentage value for the purpose of comparing

Pyi = Post (Amount) of y in the financial statements year-i

Pyo = Post (Amount) as a basic comparison

3.4.2 Trend Analysis

Trend analysis is an analysis that compares reports from one period to

another with a single basic index approach. In trend analysis it takes one year

which can be used as the base year. Then this base year is used as a basis for

consideration to be made in the form of a percentage. Base year is usually

determined from the data or financial statements of the earliest year in the

series of years of financial statements to be analyzed. Each post of the financial

report which is used as the base year is indexed 100. Then the posts of the

period analyzed are related to the same post, namely the base year. Trend

analysis can be formulated as follows:

Pyo

100

%

Pyo

Ryi =

= Pyi

x

100%

Pyo

Pyi

=

Pyi

x

100

%

Pyo

X 100%

Pyo

23

Information:

Rxi = The percentage value for the year-i

Pxi = Post (Amount) of x in the financial statements that will be analyzed

Pxo = Post (Amount) as a year base

3.4.3 Cash Conversion Cycle Analysis

According to Keown (2005), the cash conversion cycle analysis is an analytical

method that uses an approach that is the purpose of the company working

capital with the condition that working capital must be sufficient to legalize the

company's operations. The process of working capital is done by speeding up

cash from sales, increasing preparation turnover, and reducing spending on

cash. This cash cycle can be calculated as follows:

Cash Conversion Cycle =DSO + DSI – DPO

Information:

A. Days of Sales Outstanding (DSO)

DSO can also be considered as the average age of the company's receivables or

the average billing period. Days of Sales Outstanding (DSO) can be calculated

as follows:

Days of Sales Outstanding =

Days in Period

Pxo

=

Pyi

x

100

%

Pyo

Rxi =

= Pyi

x

100%

Pyo

Pxi

]]

Pyi

x

100

%

Pyo

X 100%

Pyo

24

B. Days of Sales in Inventory (DSI)

DSI can also be considered as the average age of preparation, the number of

days the company can make the inventory to be used or converted into saleable

products. DSI can be calculated as follows:

C. Days of Payable Outstanding (DPO)

The DPO shows the average age (in the number of days) of the trade debt held

by the company. DPO can be calculated as follows:

3.4.4 Analysis of Company’s Financial Ratio

A. Activity Ratio

This ratio explains the various activities of the company in conducting

operational activities efficiently which the company can then carry out its

operations properly.

Average Billing Period = Accounts Receivable / (Net Credit Sales/365)

This ratio shows the period of time to consider in collecting accounts

receivable from customers for all sales activities carried out on credit.

Accounts Receivable Turnover = Sales / Accounts Receivable

The ratio that explains a company can roll back the receivables held based on

sales activities that have been carried out.

Days of Sales in Inventory =

Days in Period

Days of Payable Outstanding =

Days in Period

25

CHAPTER IV

RESULTS AND DISCUSSION

4.1 Account Receivable Management in PT Yamazaki Indonesia

The accounts receivable management system owned by PT Yamazaki

Indonesia starts from input, process, to output. At PT Yamazaki Indonesia

input from the accounts receivable management system, which is characterized

by the sale of products, are mostly carried out on credit. Credit sales conducted

by PT Yamazaki Indonesia aim to sell more to customers which will have an

impact on the company's inflow, especially the collection of receivables. When

a company makes a sale on credit, it will allow an increase in the number of

customers to buy the company's products. In terms of the company, credit sales

have a high level of risk, that is, when customers buy products on credit, the

company must compensate with a good billing process in order to reduce the

risk of loss of accounts due to customers paying off their debts.

Then the debt management process at PT Yamazaki Indonesia is marked

by the activity of preparing sales documents (such as PO letters from

customers, DRq letters from purchasing divisions, tax invoices from financial

& accounting division), issuing invoices, to carrying out receivables collection

activities to customers. The collection of receivables made will greatly affect

the amount of the company's receivables. When the company bills well, the

collection of receivables will also be good. But in its implementation, PT

Yamazaki Indonesia sometimes often faces a number of obstacles that come

26

from the customer, for example customer negligence in paying the debt or

delay in paying the debt according to the time due. In addition, there are also

several constraints that originate from the company, such as personnel who are

very limited in terms of the collection of accounts receivable, allowing double

jobs or multiple jobs to manage receivables, and factors that originate from the

internal company.

Furthermore, the output of the receivable management system at PT

Yamazaki Indonesia is the amount of receivables in influencing the cash flow

owned by the company. Amount of receivables owned by PT Yamazaki

Indonesia is currently quite large. This can be seen in the results of component

analysis, which shows that almost 25% of the total current asset in the

company's balance sheet is the amount of receivables. According to Keown

(2005), the cash conversion cycle analysis should be another indicator to see

what the large amount of receivable (above 20%) really deters.

Table 1 Analysis per Component of Balance Sheet (Partial)

However, the time of collection of the receivables itself is still relatively

long. This can be shown from the results of the cash conversion cycle analysis.

In the cash conversion cycle analysis, the average DSO with a value of 49 days

shows that new receivables can be collected in an average of 49 days. This time

is still quite long, because the company has a policy (verbal) that accounts

receivable must be collected within 30 days, so that this clearly affects the

2015 2016 2017

Accounts Receivable 9,5% 14,6% 22,8%

Total Current Asset 100% 100% 100%

YearDescription

27

income (inflow) of the company's cash flow. When looking at the average cash

conversion cycle, PT Yamazaki Indonesia has a positive number of 12.02%

which indicates that the company already has sufficient cash to fund all

company activities optimally. Overall, the amount of receivables held by PT

Yamazaki Indonesia greatly affects the income of the company's cash flow.

Table 2 Cash Conversion Cycle Analysis

4.2 Factors Affecting the Amount of Receivables at PT Yamazaki

Indonesia

At PT Yamazaki Indonesia there are factors that influence the amount of

receivables, namely the percentage of credit sales, stuck billing customer, and

effort of billing. The following is a more detailed explanation of the factors that

affect the amount of receivables.

1. Percentage of Credit Sales

PT Yamazaki Indonesia is a manufacturing company whose entire

business activities are credit sales. The company always strives to be able

to increase sales every year. When a company decides to increase sales,

this will have an impact on the company's related divisions.

2015 2016 2017

DSO (Days of Sales Outstanding 53,36 46,08 49,50 49,64

DSI (Days of Sales in Inventory) 26,06 26,75 22,65 25,15

DPO (Days of Payable Outstanding) 89,06 55,22 44,04 62,77

Cash Conversion Cycle -9,64 17,60 28,10 12,02

AverageDescription

PT YAMAZAKI INONESIA CASH CONVERSION CYCLE ANALYSIS

Year

28

The most related division is the Sales, Marketing, Distribution and

Return division (SMDR Division), because the division greatly influences

the size of sales activities carried out to consumers. The SMDR division

strives to give customers confidence in being able to buy more company

products, or strive for new consumer searches to increase sales.

Furthermore, the purchasing division and production division also require

adjustments in terms of increasing the scale of production to meet the

decision to increase sales.

However, the four divisions mentioned above need to consider

decisions from the financial & accounting division due to the high level

of risk from sales activities carried out on credit to the company's inflow.

When the company decides to increase sales, the Sales estimator division

will estimate how much the receivables will be obtained by the company

considering the billing process carried out needs to be increased as well.

When the company has increased sales on credit, the financial &

accounting division needs to work optimally in collecting accounts

receivable, considering that financial & accounting division personnel are

very few (only 5 people) and very difficult to collect receivables from

customers (180 companies).

Every year the company has sales figures that tend to increase. PT

Yamazaki Indonesia has a percentage of sales on credit of 100% of total

sales. This is clearly based on a joint decision of the company's leadership

in deciding to increase sales. This can be seen in the following data which

29

shows that the amount of sales on credit will have an impact on the

company's income, especially accounts receivable. The greater the sales

made on credit, the greater the amount of receivables the company will

get.

Table 3 Trend Analysis of Some Balance Sheet and Profit and

Loss Accounts

Table 4 Some Balance Sheet and Profit and Loss Accounts

2015 2016 2017

BALANCE SHEET

Accounts Receivable 100% 126,09% 221,39%

Cash & Bank 100% 40,97% 80,84%

Inventory 100% 146,29% 187,37%

Accounts Payable 100% 88,37% 106,63%

PROFIT AND LOSS STATEMENTS

Gross Sales 100% 146,02% 238,67%

Net Sales 100% 173,36% 299,91%

COGS 100% 142,54% 215,62%

Operating Expenses 100% 115,30% 133,96%

OTHERS

Allowance for Doubtful Accounts 0% 0,00% 0,00%

DescriptionYear

PT YAMAZAKI INONESIA TREND ANALYSIS (PERCENTAGE)

2015 2016 2017

BALANCE SHEET

Accounts Receivable 10.752.946.441 13.558.675.348 23.806.107.994

Cash & Bank 87.189.236.718 35.717.618.195 70.480.097.141

Inventory 2.396.916.138 3.506.341.358 4.491.169.502

Accounts Payable 8.191.395.545 7.239.095.896 8.734.306.987


Gross Sales 73.556.487.262 107.405.673.309 175.554.096.014

Net Sales 45.465.591.252 78.820.903.412 136.357.980.297

COGS 33.571.861.151 47.852.221.428 72.387.562.210

Operating Expenses 55.521.013.976 64.014.887.653 74.374.657.659

OTHERS

Allowance for Doubtful Accounts 0 0 0

DescriptionYear

PT YAMAZAKI INONESIA TREND ANALYSIS

30

2. Stuck Billing Customer

On sales procedures (verbal) owned by PT Yamazaki Indonesia, there are

several requirements that must be met by customers, namely customers have

good reputation, credibility, and integrity, customers are individuals or business

entities that are legal or legal entities and customers have the financial ability

that is relied on to pay for all sales transactions with PT Yamazaki Indonesia

Initially PT Yamazaki Indonesia is very concerned about the

requirements that must be met by customers before the sale transaction is

carried out, such as credit analysis (verbal). However, over time the company

has been quite loose on the accounts receivable that have not been paid by the

customer to the company, so that in the implementation there are customers

who are still late in paying off their debts. For example, in customer companies

that have debts of more than 500 days, they are still permitted to make new

orders in the following month. This obviously will have an impact on not only

the collection of the company's receivables but also company’s cash inflow.

JULY 2018

Table 5.1 PT Supra Boga Lestari’s July Aging Schedule

Table 5.2 PT Supra Boga Lestari’s July Aging Schedule (New Orders)

AR Aged Period Sensitive (Detailed) - PT Yamazaki Indonesia - User: Rischa - Fin Period: 07-2018

Customer Name Doc. Date Due Date 1 To 30 30 To 60 60 To 90 Over 90 Balance TOP Outstanding Days

PT SUPRA BOGA LESTARI 5/3/2018 5/17/2018 0,00 0,00 582.744,80 0,00 582.744,80 14 75





31-Jul-18



PT SUPRA BOGA LESTARI 7/24/2018 8/7/2018 0,00 0,00 0,00 0,00 272.248,90 14 -7





31-Jul-18

31

Table 6.1 PT Fajar Mitra Indah’s July Aging Schedule

Table 6.2 PT Fajar Mitra Indah’s July Aging Schedule (New Orders)

Table 7.1 PT Lion Super Indo’s July Aging Schedule

Table 7.2 PT Lion Super Indo’s July Aging Schedule (New Orders)

Table 8.1 PT Naga Swalayan’s July Aging Schedule

Table 8.2 PT Naga Swalayan’s July Aging Schedule (New Orders)



PT FAJAR MITRA INDAH 7/22/2016 8/12/2016 0,00 0,00 0,00 424.499,00 424.499,00 21 718PT FAJAR MITRA INDAH 8/12/2016 9/2/2016 0,00 0,00 0,00 138.002,00 138.002,00 21 697PT FAJAR MITRA INDAH 8/12/2016 9/2/2016 0,00 0,00 0,00 339.004,00 339.004,00 21 697PT FAJAR MITRA INDAH 10/1/2016 10/22/2016 0,00 0,00 0,00 193.499,00 193.499,00 21 647PT FAJAR MITRA INDAH 11/23/2016 12/14/2016 0,00 0,00 0,00 628.882,00 628.882,00 21 594

31-Jul-18



PT FAJAR MITRA INDAH 7/24/2018 8/14/2018 0,00 0,00 0,00 0,00 15.856.393,30 21 -14





31-Jul-18



PT LION SUPER INDO 1/16/2018 2/15/2018 0,00 0,00 0,00 354.375,05 354.375,05 30 166

PT LION SUPER INDO 4/5/2018 5/5/2018 0,00 0,00 141.000,02 0,00 141.000,02 30 87




31-Jul-18



PT LION SUPER INDO (JAWA BARAT)7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 604.881,20 30 -25




PT LION SUPER INDO (JAWA BARAT)7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 1.653.021,70 30 -25

31-Jul-18



NAGA SWALAYAN 6/14/2018 7/14/2018 532.133,80 0,00 0,00 0,00 532.133,80 30 17

NAGA SWALAYAN 6/14/2018 7/14/2018 507.007,60 0,00 0,00 0,00 507.007,60 30 17

NAGA SWALAYAN 6/14/2018 7/14/2018 508.509,10 0,00 0,00 0,00 508.509,10 30 17

NAGA SWALAYAN 6/14/2018 7/14/2018 437.632,80 0,00 0,00 0,00 437.632,80 30 17

NAGA SWALAYAN 6/14/2018 7/14/2018 922.134,40 0,00 0,00 0,00 922.134,40 30 17

31-Jul-18



NAGA SWALAYAN 7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 758.634,80 30 -25

NAGA SWALAYAN 7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 710.256,80 30 -25

NAGA SWALAYAN 7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 763.133,80 30 -25

NAGA SWALAYAN 7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 516.006,70 30 -25

NAGA SWALAYAN 7/26/2018 8/25/2018 0,00 0,00 0,00 0,00 1.685.638,90 30 -25

31-Jul-18

32

These 4 customers are the greatest contributor for the company, but their

feedback towards PT Yamazaki Indonesia is not really good. You can see that

there are several customers with Outstanding Days more than 700 days which

completely explains how PT Yamazaki Indonesia should make a new strategy to

all this condition to ensure that all receivables are earned within the agreed period.

Such sanction plan for defaulters could be beneficial for the company and should

be a great idea if the company wants to expand. PT Yamazaki Indonesia has

grown more than 190% (net sales) from the last 2 years, and stricter rules should

be applied. Page 30 – 37 will describe how PT Yamazaki Indonesia’s regulation

is too loose, because even though the customers are not able to pay their debt, PT

Yamazaki Indonesia still allows them to have a new orders of product.

AUGUST (CONT.)

Table 9.1 PT Supra Boga Lestari’s August Aging Schedule

Table 9.2 PT Supra Boga Lestari’s August Aging Schedule (New Orders)

`

Table 10.1 PT Fajar Mitra Indah’s August Aging Schedule




PT SUPRA BOGA LESTARI 6/28/2018 7/12/2018 0,00 363.003,30 0,00 0,00 363.003,30 14 50




31/08/2018








31/08/2018



PT FAJAR MITRA INDAH 7/22/2016 8/12/2016 0,00 0,00 0,00 424.499,00 424.499,00 21 749





31/08/2018

33

Table 10.2 PT Fajar Mitra Indah’s August Aging Schedule (New Orders)

Table 11.1 PT Lion Super Indo August Aging Schedule

Table 11.2 PT Lion Super Indo’s August Aging Schedule (New Orders)

Table 12.1 PT Naga Swalayan’s August Aging Schedule

Table 12.2 PT Naga Swalayan’s August Aging Schedule (New Orders)




PT FAJAR MITRA INDAH 8/31/2018 9/21/2018 0,00 0,00 0,00 0,00 691.848,30 21 -21




31/08/2018








31/08/2018







PT LION SUPER INDO (JAWA BARAT)8/31/2018 9/30/2018 0,00 0,00 0,00 0,00 1.710.016,00 30 -30

31/08/2018



NAGA SWALAYAN 7/2/2018 8/1/2018 777.007,00 0,00 0,00 0,00 777.007,00 30 30

NAGA SWALAYAN 7/2/2018 8/1/2018 878.257,60 0,00 0,00 0,00 878.257,60 30 30

NAGA SWALAYAN 7/4/2018 8/3/2018 1.031.631,70 0,00 0,00 0,00 1.031.631,70 30 28

NAGA SWALAYAN 7/4/2018 8/3/2018 1.755.015,90 0,00 0,00 0,00 1.755.015,90 30 28

NAGA SWALAYAN 7/6/2018 8/5/2018 2.054.268,70 0,00 0,00 0,00 2.054.268,70 30 26

31/08/2018



NAGA SWALAYAN 8/31/2018 9/30/2018 0,00 0,00 0,00 0,00 2.860.904,20 30 -30

NAGA SWALAYAN 8/31/2018 9/30/2018 0,00 0,00 0,00 0,00 1.184.638,40 30 -30

NAGA SWALAYAN 8/31/2018 9/30/2018 0,00 0,00 0,00 0,00 4.357.548,80 30 -30

NAGA SWALAYAN 8/31/2018 9/30/2018 0,00 0,00 0,00 0,00 2.782.532,50 30 -30

NAGA SWALAYAN 8/30/2018 9/29/2018 0,00 0,00 0,00 0,00 914.639,00 30 -29

31/08/2018

34

SEPTEMBER (CONT.)

Table 13.1 PT Supra Boga Lestari’s September Aging Schedule

Table 13.2 PT Supra Boga Lestari’s September Aging Schedule (New

Orders)

Table 14.1 PT Fajar Mitra Indah’s September Aging Schedule

Table 14.2 PT Fajar Mitra Indah’s September Aging Schedule (New

Orders)

Table 15.1 PT Lion Super Indo’s September Aging Schedule

Table 15.2 PT Lion Super Indo’s September Aging Schedule (New Orders)




PT SUPRA BOGA LESTARI 9/29/2018 10/13/2018 0,00 0,00 0,00 0,00 0,80 14 -13




30/09/2018








30/09/2018








30/09/2018








30/09/2018



PT SUPRA BOGA LESTARI 6/12/2018 6/26/2018 0,00 0,00 0,00 279.379,10 279.379,10 14 96





30/09/2018



PT LION SUPER INDO 5/25/2018 6/24/2018 0,00 0,00 0,00 0,00 0,00 30 98





30/09/2018

35

Table 16.1 PT Naga Swalayan’s September Aging Schedule

Table 16.2 PT Naga Swalayan’s September Aging Schedule (New Orders)

OCTOBER (CONT.)

Table 17.1 PT Supra Boga Lestari’s October Aging Schedule

Table 17.2 PT Supra Boga Lestari’s October Aging Schedule (New

Orders)

Table 18.1 PT Fajar Mitra Indah’s October Aging Schedule



NAGA SWALAYAN 8/7/2018 9/6/2018 1.315.791,13 0,00 0,00 0,00 1.315.791,13 30 24

NAGA SWALAYAN 8/10/2018 9/9/2018 1.483.231,48 0,00 0,00 0,00 1.483.231,48 30 21

NAGA SWALAYAN 8/13/2018 9/12/2018 1.315.791,13 0,00 0,00 0,00 1.315.791,13 30 18

NAGA SWALAYAN 8/15/2018 9/14/2018 1.315.791,13 0,00 0,00 0,00 1.315.791,13 30 16

NAGA SWALAYAN 8/17/2018 9/16/2018 1.483.231,48 0,00 0,00 0,00 1.483.231,48 30 14

30/09/2018



NAGA SWALAYAN 9/29/2018 10/29/2018 0,00 0,00 0,00 0,00 1.151.642,80 30 -29

NAGA SWALAYAN 9/29/2018 10/29/2018 0,00 0,00 0,00 0,00 1.125.016,20 30 -29

NAGA SWALAYAN 9/29/2018 10/29/2018 0,00 0,00 0,00 0,00 917.262,50 30 -29

NAGA SWALAYAN 9/29/2018 10/29/2018 0,00 0,00 0,00 0,00 693.760,10 30 -29

NAGA SWALAYAN 9/29/2018 10/29/2018 0,00 0,00 0,00 0,00 1.836.767,90 30 -29

30/09/2018








31-Okt-18



PT SUPRA BOGA LESTARI 10/31/2018 11/14/2018 0,00 0,00 0,00 0,00 1.276.182,05 14 -14





31-Okt-18





PT FAJAR MITRA INDAH 11/30/2016 12/21/2016 0,00 0,00 0,00 2.466.040,00 2.466.040,00 21 679

PT FAJAR MITRA INDAH 12/7/2016 12/28/2016 0,00 0,00 0,00 8.286.767,50 8.286.767,50 21 672

PT FAJAR MITRA INDAH 9/24/2018 10/15/2018 33.116.562,60 0,00 0,00 0,00 33.116.562,60 21 16

31-Okt-18

36

Table 18.2 PT Fajar Mitra Indah’s October Aging Schedule (New Orders)

Table 19.1 PT Lion Super Indo’s October Aging Schedule

Table 19.2 PT Lion Super Indo’s October Aging Schedule (New Orders)

Table 20.1 PT Naga Swalayan’s October Aging Schedule








31-Okt-18


Customer Name Doc. Date Due Date1 To 3030 To 6060 To 90 Over 90 Balance TOP Outstanding Days

PT LION SUPER INDO 10/31/2018 11/30/2018 0,00 0,00 0,00 0,00 10.540.453,48 30 -30





31-Okt-18


Customer Name Doc. Date Due Date1 To 3030 To 6060 To 90 Over 90 Balance TOP Outstanding Days






31-Okt-18


Customer Name Doc. Date Due Date 1 To 30 30 To 6060 To 90 Over 90 Balance TOP Outstanding Days

NAGA SWALAYAN 8/24/2018 9/23/2018 0,00 2.550.025,50 0,00 0,00 2.550.025,50 30 38

NAGA SWALAYAN 9/19/2018 10/19/2018 1.755.767,20 0,00 0,00 0,00 1.755.767,20 30 12

NAGA SWALAYAN 9/19/2018 10/19/2018 619.506,80 0,00 0,00 0,00 619.506,80 30 12

NAGA SWALAYAN 9/19/2018 10/19/2018 2.706.029,70 0,00 0,00 0,00 2.706.029,70 30 12

NAGA SWALAYAN 9/19/2018 10/19/2018 1.538.266,40 0,00 0,00 0,00 1.538.266,40 30 12

31-Okt-18

37

Table 20.2 PT Naga Swalayan’s October Aging Schedule (New Orders)

When PT Yamazaki Indonesia accepts customers who are less

creditworthy, so this can result in the emergence of uncollectible accounts, so

the company seeks a maximum collection process to avoid the possibility of

uncollectible accounts. When billing is done optimally, the company also needs

to pay a large collection fee, so that consideration in choosing customers needs

to be done appropriately.

3. Effort of Billing

The process of collecting accounts receivable will have an impact on the

size of the company's receivables. The billing process carried out is usually

focused on the amount of receivables that have passed the maturity period, so

the company seeks to save its receivables so that uncollectible receivables

arise. At PT Yamazaki Indonesia the collection business is carried out based on

the procedures set by the company (verbal). PT Yamazaki Indonesia has also

made every effort to collect its receivables. This is caused by the very small

number of personnel from the Finance department, so that sometimes the

receivables cannot be collected according to maturity or the delay in receiving

receivables.


Customer Name Doc. Date Due Date 1 To 3030 To 6060 To 90 Over 90 Balance TOP Outstanding Days

NAGA SWALAYAN 10/31/2018 11/30/2018 0,00 0,00 0,00 0,00 1.978.903,30 30 -30

NAGA SWALAYAN 10/31/2018 11/30/2018 0,00 0,00 0,00 0,00 544.881,70 30 -30

NAGA SWALAYAN 10/31/2018 11/30/2018 0,00 0,00 0,00 0,00 2.014.903,00 30 -30

NAGA SWALAYAN 10/31/2018 11/30/2018 0,00 0,00 0,00 0,00 1.539.771,20 30 -30

NAGA SWALAYAN 10/30/2018 11/29/2018 0,00 0,00 0,00 0,00 619.885,20 30 -29

31-Okt-18

38

Technically, PT Yamazaki Indonesia has carried out a predetermined

billing procedure, starting from preparing billing documents until the invoice is

issued. But there is no standard that is the basis for the process of managing

accounts receivable. Then in its implementation, the company experienced

several obstacles, especially constraints that came from customers such as

negligence in paying off debts that were due, deliberately slowing down in

paying off debts for certain reasons and so on. The billing process that is

carried out also sometimes involves the financial manager up to the president

director in confirming the receivables bill to the customer. This is due to the

nature of customers who sometimes pay less attention to ethics in paying off

debt.

Sometimes companies feel a dilemma when there are customers who are

late in paying off their debts to PT Yamazaki Indonesia. On one side the

company needs to save its receivables that are due, but on the other hand the

company is worried that customers will feel dissatisfied with the services

provided by the company to customers. This is because the company has

established a fairly close cooperative relationship with several customers who

have been buying PT Yamazaki Indonesia products for a very long time so that

sometimes there is a concession in the billing process carried out. This means

that customers and PT Yamazaki Indonesia are less professional in carrying out

this business collaboration. A good cooperation relationship should have an

impact on the timeliness of debt repayment rather than slowing down debt

payments.

39

4.3 Account Receivable Management Process in PT Yamazaki Indonesia

At PT Yamazaki Indonesia, the occurrence of accounts receivable is

caused by the activity of selling products on credit to customer companies. This

is indicated by the product received in advance by the customer and then the

new customer makes a payment in accordance with the specified time period.

The applied credit policy is expected to be able to provide optimal benefits and

be able to increase customer satisfaction. This is due to the high level of credit

sales risk that requires companies to carry out all sales procedures based on

their credit policies (verbal).

Credit policies owned by PT Yamazaki Indonesia, in general, is the same

as the theory contained in financial books (e.g. 5C), namely the criteria for

granting credit. However, there is one thing that is very much considered by PT

Yamazaki Indonesia is the capacity or capacity that is the ability of customers

to manage their business to obtain profits which are then assessed to see the

ability to pay their debts. The main requirements set by PT Yamazaki

Indonesia and must be fulfilled by customers, namely:

Customers have good integrity, credibility and integrity.

Customers are individuals or business entities that are legal or legal

entities.

Customers have the financial ability that is relied upon to pay for all sales

transactions with PT Yamazaki Indonesia.

40

PT Yamazaki Indonesia’s sales are all made on credit, both unsecured

credit sales and collateral sales. Unsecured credit sales policies are given to

companies that are believed to be able to pay sales transactions well, such as

Alfa-mart, Alfa-midi and private companies that are believed to be able to

make payments well. The sale of unsecured credit is based on an agreement

agreed by both parties without violating the policies set by PT Yamazaki

Indonesia. Then the credit sales policy with guarantees is given to companies

that are able to submit collateral in accordance with the provisions of PT

Yamazaki Indonesia.

Technically, PT Yamazaki Indonesia has procedures for making credit

sales to customers. The procedure carried out involves several divisions within

the company's management functions. The most involved divisions are the

marketing, purchasing division and financial & accounting division. The sales

procedure begins with the issuance of a price quote letter (Surat Penawaran

Harga) from the marketing division to customers. Then the customer will give

a reply in the form of a letter ordering goods or a PO (Purchase Order) to the

marketing division of PT Yamazaki Indonesia. After that, the PO letter is

received and processed by negotiation between the customer and PT Yamazaki

Indonesia. Negotiations are carried out by both parties until they find a specific

agreement, especially in terms of payment and discount times. Then the

agreement that has been obtained is outlined in the form of an agreement

signed by both parties. After obtaining an agreement, then the ordered product

is ready to be sent. When the goods have been sent and received by the

41

customer, then the financial & accounting division begins preparing documents

to issue invoice invoices. When an invoice is issued, there is usually a sales

discount, but in this case there is an exception namely the absence of sales

discounts for the whole. Sales discounts are only given to certain customers

who have a special relationship with PT Yamazaki Indonesia, namely the

Holding Company of the company itself. Unfortunately, all of this information

was obtained from interview sessions only (verbally), so to give more

contribution to the company, the researcher decides to create SOP for PT

Yamazaki Indonesia in the form of Flowchart. Further explanation can be

described in Figure 4 page 42.

42

Figure 4 Account Receivable Business Process (Created by the

Researcher)

43

4.4 Debt Collection Procedure

The billing process using an invoice is only done once. This is to avoid the

possibility of double invoice. However, if there are errors in the invoice, such

as errors in product data being billed, errors in tax invoice numbers, typing

errors and so on, then there is a procedure for returning invoices via return

notes first. Then invoices that have been repaired or revised are issued. PT

Yamazaki Indonesia also has a fairly good scheduling system, when all invoice

documents are ready to be issued.

After the invoice is issued, sometimes the customer is difficult or slow in

responding to bills or it is difficult to pay off, so the next attempt is made by PT

Yamazaki Indonesia, namely monitoring or supervision. The monitoring

activities are carried out by the financial & accounting division by contacting

by fax or calling the customer to confirm or by coming directly to the location

of the customer's company. When this is considered less influential, then the

company involves the individual role of the marketing division in assisting the

billing process.

PT Yamazaki Indonesia experienced several obstacles in the billing

process, namely the distance or coverage of the customer's company area, data

changes such as address changes, tax invoices, and lack of personnel in the

financial & accounting division. In addition, the main obstacle that most often

occurs is the delay in paying off debt. Of the several constraints faced,

management always strives to be able to manage and control their receivables.

When the management cannot manage and control the receivables, it will have

44

an impact on the income received (inflow) or maybe the company will lose

revenue due to the emergence of uncollectible accounts.

The most tangible effort made by PT Yamazaki Indonesia in dealing with

these problems is by sticking to existing credit guidelines or policies and

implementing a good management system.

4.5Trend Analysis

Based on trend analysis, the financial condition of PT Yamazaki Indonesia

shows a situation that tends to increase from 2015-2017 (volatile). When

viewed from several accounts contained in the balance sheet, such as accounts

receivable, debt and inventory, all tend to increase. However, the increasing

trend does not always provide good information. For example, the amount of

receivables that always increases from 2015-2017 shows an increase in credit

sales made by the company. This will affect the increase in inflow that will be

received by the company. The percentage of accounts receivable can be seen

in the balance sheet (inflow) from 2016 to 2017 which is 126.09%; and

221.39%. However, when the receivables are not followed by a good collection

process, it will affect the income that will be received so that it will also have

an impact on the company's operations. In addition, the amount of accounts

receivable can allow an increase in uncollectible accounts.

The percentage of allowance for accounts receivable from 2015 to 2017 is

0%. This clearly violates the regulations made by IFRS. Accounting standards,

45

both SAK and IFRS, treat receivables as financial instruments, namely

financial assets, whose recognition and measurement are regulated in PSAK 55

/ IAS 39, while the presentation is regulated in PSAK 50 / IAS 32 and PSAK 1 /

IAS 1 which states that all the receivables should be provisioned.

The percentage of corporate debt also tends to increase, namely by 88.37%

and 106.63% from 2016 to 2017 (volatile). This is due to an increase in sales

which requires companies to increase the scale of production so that it also has

an impact on increasing corporate debt. The main reason for the increase in

debt is because companies always buy raw materials from suppliers on credit

so that it influences the increase in the percentage of corporate debt. However,

an increase in debt to companies is not too problematic when there is also an

increase in sales activities which will then affect the company's inflow.

At PT Yamazaki Indonesia, sales activities tend to increase. As presented

in table 22, the data from 2016 to 2017 is equal to 146.02% and 238,67%.

This shows that the company is able to provide trust to customers regarding the

quality of the products offered. In addition, the increase in sales was caused by

the role and hard work of the marketing division. However, the trend of

increasing sales every year causes an increase in inventory. As presented in

table 22, the data from 2016 to 2017 is equal to 146.29% and 187.37%. This

causes companies to need to increase their sales extra so that inventory does

not accumulate too much in the company's warehouse. Stockpiles that

accumulate result in additional storage costs, considering the products stored

contain ingredients that are easily spoiled.

46

The component in the income statement shows that there is an increase in

sales which has a fairly good impact on the net income obtained by the

company. It can be seen from the data from 2016 to 2017 that there is a

fluctuating situation in the net sales that is equal to 173.36% and 299,91%. This

explains the increase in net income that is significant in 2017.

In addition, other possible causes of the rise and fall of net income are the

tendency of fluctuations in cost of goods sold and the company's operating

expenses. The trend of increasing cost of goods sold is caused by the possibility

of rising raw material requirements as evidenced by the increase in sales every

year. As stated in table 22, the data of cost of goods sold in 2016 up to 2017

which is equal to 142.54% and 215.62%. This shows that an increase in sales

results in an increase in cost of goods sold as well as an impact on profits to be

received. As it is understood that gross profit is the difference between sales

and cost of goods sold and similarly, the amount of operating expenses that

affect the amount of net income received by the company. It can be seen in the

data on the number of business expenses in 2016 up to 2017 which shows an

increasing trend of 115.30% and 133.96%. Based on these data, it was

explained that the increase in sales also resulted in an increase in operating

expenses. This is due to the increase in sales expenses and general and

administrative expenses each year.

47

The following are things that cover sales expenses including employee

expenses, advertising, fees, promotions, fostering relations, billing, and

telephone.

Also, things that cover general and administrative expenses, namely

employee expenses, employee welfare, maintenance and repairs, taxes and fees

and professional services are also the reason/ possible causes of the rise and fall

of the net income.

Different on cash & bank accounts which always decrease from 2016 to

2017 which is 40.97% and 80.84% (volatile). This decrease in cash & banks

caused by adjustments to three activities, namely adjustments from operating

activities, investment activities, and funding activities. The cash & bank

decline in 2017 amounted to 80.84% mainly due to adjustments from funding

activities, namely the addition of other assets. Unlike the previous years, the

amount of adjustments to funding activities is quite large and this affects the

cash & banks.

48

Table 21 Trend Analysis of Some Balance Sheet and Profit and Loss

Accounts

4.6 Cash Conversion Cycle Analysis

The process of minimizing working capital is done by accelerating the

collection of cash from sales, increasing inventory turnover, and reducing

spending with cash. For this case, it is important to compare the cash

conversion cycle analysis to PT Yamazaki Indonesia’s competitor which is PT

Nippon Indosari Corpindo or used to be called as Sari Roti. The Table of

analysis will be provided below:

2015 2016 2017

BALANCE SHEET

Accounts Receivable 10.752.946.441 13.558.675.348 23.806.107.994

Cash & Bank 87.189.236.718 35.717.618.195 70.480.097.141

Inventory 2.396.916.138 3.506.341.358 4.491.169.502

Accounts Payable 8.191.395.545 7.239.095.896 8.734.306.987


Gross Sales 73.556.487.262 107.405.673.309 175.554.096.014

Net Sales 45.465.591.252 78.820.903.412 136.357.980.297

COGS 33.571.861.151 47.852.221.428 72.387.562.210

Operating Expenses 55.521.013.976 64.014.887.653 74.374.657.659

OTHERS

Allowance for Doubtful Accounts 0 0 0

2015 2016 2017

BALANCE SHEET

Accounts Receivable 100% 126,09% 221,39%

Cash & Bank 100% 40,97% 80,84%

Inventory 100% 146,29% 187,37%

Accounts Payable 100% 88,37% 106,63%


Gross Sales 100% 146,02% 238,67%

Net Sales 100% 173,36% 299,91%

COGS 100% 142,54% 215,62%

Operating Expenses 100% 115,30% 133,96%

OTHERS

Allowance for Doubtful Accounts 0% 0,00% 0,00%

DescriptionYear

PT YAMAZAKI INONESIA TREND ANALYSIS (PERCENTAGE)

DescriptionYear

PT YAMAZAKI INONESIA TREND ANALYSIS

49

Table 22 PT Yamazaki Indonesia Cash Conversion Cycle Analysis

Table 23 PT Nippon Indosari Corpindo (Sari Roti)

Cash Conversion Cycle Analysis

Based on Cash Conversion Cycle analysis, PT Yamazaki Indonesia has an

average DSO, DSI, and DPO value of 49.64; 25.15; 62.77and the cash

conversion cycle number is 12.02. The average DSO worth 49.64 (rounded to

50) days shows the company is still too long in collecting accounts due to

credit sales. This could create a problem because the company has a policy

(verbal) that all receivables have to be collected within 30 to 45 days. While

Sari Roti has an average DSO worth 37,72(rounded to 38) days which is still

acceptable for the standard of collection period in food industry which is

normally collected in 30 – 45 days. The impact that will occur is the reduction

in the amount of income (inflow) that will be received by the company each

year.

PT Yamazaki Indonesia is one company whose entire business activities or

sales are carried out on credit. The company carries out sales activities based

2015 2016 2017




Cash Conversion Cycle -9,64 17,60 28,10 12,02

AverageDescription

PT YAMAZAKI INONESIA CASH CONVERSION CYCLE ANALYSIS

Year

2015 2016 2017




Cash Conversion Cycle 14,90 17,54 26,54 19,66

DescriptionYear

Average

PT NIPPON INDOSARI CORPINDO (SARI ROTI) CASH CONVERSION CYCLE ANALYSIS

50

on policies set by the company. The applied credit policy is expected to be able

to provide optimal benefits and be able to increase customer satisfaction. This

is due to the high level of credit sales risk, which requires companies to carry

out all sales procedures based on their credit policies. This study aims to

determine the accounts receivable management system run at PT Yamazaki

Indonesia, analyze the factors that affect the size of PT Yamazaki Indonesia's

receivables, analyze the financial performance of PT Yamazaki Indonesia in

the period 2015-2018, and analyze the effectiveness of controlling receivables

against cash flows.

Then the average DSI of PT Yamazaki Indonesia worth 25.15 (rounded to

25) days also shows the company has been relatively fast in selling its

inventory. By comparing the results of average DSI with the average standard

DSI in the FMCG industry or commonly called Fast Moving Consumer Goods,

(Costa, 2014) the results of the average DSI of PT Yamazaki Indonesia are still

relatively very different at 30%.

Figure 5 – Descriptive Statistics for FMCG and Airline Industry (Costa, 2014)

51

This means that PT Yamazaki Indonesia is too fast in selling its inventory, but

the inventory is funded by debt (the DPO will be discussed after this). The

company needs to increase sales effectively with debt collection which is also

effective so that the inventory of goods in the warehouse is not funded by debt.

Similarly, the average DPO worth 62.77 (rounded to 62) days indicates that the

company has a long enough time to pay off its debts after collecting cash and

receivables in one period and it actually doubles the amount of days needed in

PT Nippon Indosari Corpindo which only need 33,44 (rounded to 33) days.

This is due to the large amount of debt held by the company because most of its

operations are funded from debt. For example, the purchase of raw materials

obtained from suppliers (suppliers) is done on credit or debt.

4.7 Financial Ratio Analysis

Financial ratio analysis is used to know in general the financial

performance of a company. In this study, the researcher used several financial

ratios, namely activity ratios to determine the financial performance of PT

Yamazaki Indonesia.

4.7.1Activity Ratio

The activity ratio is a ratio that explains the various activities of the

company in conducting operations efficiently and then the company can

carry out its operations properly. From the results of the activity ratio

52

analysis consisting of the average billing period and accounts receivable

turnover, explained that PT Yamazaki Indonesia has a fluctuating activity

ratio in 2017.

In the ratio of the average billing period, PT Yamazaki Indonesia still

requires a considerable amount of time in collecting receivables. This can

be seen from the average billing period in the period 2015 - 2017 which is

equal to 70.95 (rounded to 71) days, equivalent to 2.36 months (almost

close to 2.5 months), where the company targets collectible receivables in

the long term time of 30-45 days or 1 - 1.3 months. This is clearly very far

compared to the average Nippon Indosari Corpindo billing period, which

amounted to 44.22 (rounded up to 44) days or equivalent to 1.5 months,

where the figure still covers the existing standard. This is one indication

that the company is still not good at conducting the collection of

receivables in accordance with the time set. This is caused by several

factors, namely in terms of customers or in terms of the company itself. In

terms of customers, that is caused by the goods received are still partial or

sent in part, so customers tend to want to pay after the goods are received in

full and complete. Then it was also caused by customer negligence in

paying off debts that made PT Yamazaki Indonesia always contact. When

viewed in terms of the company, the billing system (verbal) has been

implemented well but has not been effective. The main obstacle that is

quite inhibiting is the personnel factor which only amounts to five people in

the financial & accounting division compared to the very large number of

53

customers reaching 180 companies. This causes the possibility of double

jobs or multiple jobs such as carrying out billing and managing financial

documents.

Table 24 PT Yamazaki Indonesia Activity Ratio

*ABP = Average Billing Period

** ABP Monthly = Average of Average Billing Period (Days)/12

To support the researchers' argument against the average billing period

ratio, researchers also provide other analyzes, namely the analysis of the

accounts receivable turnover ratio. In the accounts receivable turnover ratio,

PT Yamazaki Indonesia has a fluctuating ratio figure from the 2015-2017

periods. This means that PT Yamazaki Indonesia was only able to play

back the accounts receivable from the sales activities, namely the average

ratio of 5.26 times. It is different from PT Nippon Indosari Corpindo who

managed to collect its receivables as much as 8.31 times per year. This is

caused by a bad collection of accounts receivable and has the impact of the

possibility of uncollectible accounts. When the amount of uncollectible

receivables increases, the company will also experience a decrease in

income (inflow), especially the decrease in accounts receivable itself.

2015 2016 2017 AVERAGE

86,32518225 62,78685333 63,72365885 70,94523148 2,36 5,074336816

2015 2016 2017 AVERAGE

42,05501414 41,09686203 49,51705685 44,22297767 1,47 8,140564452

2015 2016 2017

4,23 5,81 5,73 5,26

2015 2016 2017

8,68 8,88 7,37 8,31

AVERAGE BILLING PERIOD OF PT YAMAZAKI INDONESIA (ANNUALLY)

AVERAGE BILLING PERIOD OF PT NIPPON INDOSARI CORPINDO (ANNUALLY)

ABP MONTHLY**

ABP MONTHLY**

12/ABPM

ACCOUNT RECEIVABLE TURNOVER PT YAMAZAKI INDONESIAAVERAGE

AVERAGEACCOUNT RECEIBALE PT NIPPON INDOSARI CORPINDO

12/ ABPM

54

4.8 Managerial Implications

PT Yamazaki Indonesia is a manufacturing company whose entire

business is credit sales. Sales made on credit will have an impact on the amount

of receivables that will be obtained and the amount of the receivables will have

an influence on the company's cash flow income. Credit sales conducted by PT

Yamazaki Indonesia are based on the policies set by the company (verbal). A

very important policy is the analysis of the criteria that must be met by the

customer before starting a credit purchase transaction.

At PT Yamazaki Indonesia, the policies that have been held are quite

good, because the policy is generally related to the collection of customer

information including the ability of customers to process payments for sales

transactions made on credit. But in its implementation, PT Yamazaki Indonesia

has difficulty collecting fees. One reason is from the customer itself. Initially

the company did prior credit analysis to customers, namely adjusting criteria

that must be met by customers, but after the company established a cooperative

relationship with several customers for a long time, sometimes some customers

ignored all regulations in the process of repaying debt. On the one hand, the

company has been able to establish good and long-standing cooperative

relationships with several customers, but on the other hand it turns out that

customers are less professional in paying their debts so that this will affect the

collection of receivables that can be billed and have an impact on the

company's cash flow.

55

Actually, PT Yamazaki Indonesia is able to solve the problems of the

receivables it has obtained by improving or using the current credit policies in a

more professional manner and being more assertive towards its customers. If

PT Yamazaki Indonesia is able to be professional and more assertive, the

customers will surely feel reluctant and will make debt payments to the

company on the basis of regulations and agreements that have been set at the

beginning. Furthermore, PT Yamazaki Indonesia will see the impact of their

firm and professional attitude, namely the collection of receivables according

to maturity. When the company is able to make customers pay their debts

according to maturity, the company will have a good cash flow situation.

However, it is also important for PT Yamazaki Indonesia to uphold credit

policies in a polite and good manner so that relations between companies are

maintained.

4.9 Findings

4.9.1 Insufficient and Ineffective Number of AR Employees

In PT Yamazaki Indonesia, the Finance division is only consisting of

5people. Insufficient staff led to excessive workloads. In the meanwhile,

the rest of staff practicing focus to motivate their selves to complete the

task assigned. Specifically, performing extra-role behaviors early in one’s

employment affects the development of a role for that individual such that

after exhibiting a high level of initial extra-role behaviors, employees may

56

begin to perceive these behaviors to be part of their organizational role

(Penner et al., 1997), leading to the development of a citizenship role

identity. Below is the amount of invoices were made.

Table 25 Numbers of Invoices Were Made in 2017

Table 26 Numbers of Invoices Were Made in 2018

4.9.2 Recording of Accounts Receivable that are Still Incomplete&

Manual

In accounting or finance, recording is one of the keys of success of

neatness of the financial reporting of the company. When companies have a

lack of any appreciable standardization of financial reporting terminology,

it will surely complicate the understanding of many financial statement

account entries. This circumstance can be confusing for the beginning

investor. There's little hope that things will change on this issue in the

foreseeable future, but a good financial dictionary can help considerably.

The amount of return also still recorded by manual method and this will

57

clearly creates a high risk of error made by the employee. The average

difference every month is around (299.676.275). Usually in auditing, the

amount of numbers in aging schedule should represent the actual number in

Financial Statement. Differently in PT Yamazaki Indonesia as you may see

below.

Table 27 Accounts Receivable Balance Sheet Record of PT Yamazaki

Indonesia (2017)

Table 28 Accounts Receivable Balance Sheet Record of PT Yamazaki

Indonesia (2018)

4.9.3 Provision

If you extend credit to customers, chances are a percentage of those

accounts will eventually become uncollectable and need to be written off. A

bad debt allowance, also known as an allowance for doubtful accounts, is

one of two ways to account for and offset the losses from charged off

accounts. The other method is the direct write-off. The bad debt allowance

creates a general fund based on your accounts receivables, or “A/R,” the

Balance Sheet January February March April May June July August

Trade Receivable

Related parties 14.066.902.019 15.445.591.630,29 18.714.163.819,36 18.338.219.363,36 16.185.576.408,12 15.483.974.232,15 17.146.822.284,85 18.606.896.191,75

Third parties 1.214.264.967 1.390.515.352,30 1.055.523.760,76 930.430.267,55 970.595.798,44 1.106.111.976,83 1.435.265.703,02 1.948.825.632,35

15.281.166.986 16.836.106.983 19.769.687.580 19.268.649.631 17.156.172.207 16.590.086.209 18.582.087.988 20.555.721.824

Data Listing Invoice 14.064.618.362 14.011.088.395 16.471.181.673 15.271.202.307 15.478.353.063 13.370.946.463 15.810.198.418 17.632.329.549

Difference with TB 2.283.657 1.434.503.236 2.242.982.146 3.067.017.056 707.223.345 2.113.027.769 1.336.623.867 974.566.643

Third parties 136.234.793 132.054.793,00 132.054.793,00 132.054.793,00 132.054.793,00 132.054.793,00 0,00 0,00

Related Parties - 0,00 0,00 0,00 0,00 0,00 0,00 0,00

TOTAL AR 15.417.401.779 16.968.161.776 19.901.742.373 19.400.704.424 17.288.227.000 16.722.141.002 18.582.087.988 20.555.721.824

Per Aging / Listing AR 15.281.419.308 16.836.971.475 19.984.914.189 19.484.324.454 17.372.485.925 16.811.088.917 18.798.243.612 20.776.719.532

DIFFERENCE 135.982.471 131.190.301 (83.171.816) (83.620.030) (84.258.925) (88.947.915) (216.155.624) (220.997.708)

Balance Sheet January February March April May June July August

Trade Receivable

Related parties 21.001.910.899 16.830.309.650 16.654.036.533 17.273.777.852 16.590.637.777 15.812.518.238 23.099.909.255 22.900.481.318

Third parties 2.370.632.198 2.350.906.882 2.554.639.663 2.571.596.763 2.584.893.244 2.422.045.231 2.201.125.965 2.393.665.463

23.372.543.097 19.181.216.532 19.208.676.197 19.845.374.615 19.175.531.022 18.234.563.469 25.301.035.221 25.294.146.780

TOTAL AR 23.372.543.097 19.181.216.532 19.208.676.197 19.845.374.615 19.175.531.022 18.234.563.469 25.301.035.221 25.294.146.780

Per Aging / Listing AR 23.672.219.373 19.480.892.807 19.508.352.472 20.145.050.890 19.475.207.297 18.234.563.469 25.301.035.221 25.294.146.780

DIFFERENCE (299.676.275) (299.676.275) (299.676.275) (299.676.275) (299.676.275) 0 0 0

58

direct write-off charges off specific debts that you identify as uncollectable.

Differently with PT Yamazaki Indonesia, the top management knows

exactly that a company should have made an allowance for uncollectible

debt. And there should be a standard too for it (e.g. debt more than 2 years

will be adjusted as allowance for doubtful accounts; debt more than 5 years

will be written off).

Table 29 Statements of Financial Position

4.9.3 Over Sales Returns

Sales returns or returns inwards, are a normal part of business. Goods

may be returned to supplier if they carry defects or if they are not according

to the specifications of the buyer. Certain designated individuals within the

company should be assigned the authority to develop sales return policies,

authorize sales returns, and approve credit memos. Others within the

organization should recognize these specific individuals and should not

process returns if they have not been approved by a designated person. In

59

PT Yamazaki Indonesia, the implementation of sales return already exists

but using Microsoft Excel manually. This results in a low control of

recordings of sales return and errors. The amount of sales return in PT

Yamazaki Indonesia is relatively high compared to PT Nippon Indosari

Corpindo. It ever reaches 29% of gross sales in January 2018 with the

average of 23% for the period of January – August 2018 in PT Yamazaki

Indonesia; while in PT Nippon Indosari Corpindo only reach 18%. This

creates a really high difference if we compare.

Table 30 Data Return

60

CHAPTER V

CONCLUSION AND RECOMMENDATION

5.1 Conclusion

A. Based on the analysis of the receivable management system, PT Yamazaki

Indonesia has a verbal SOP not yet in writing. Verbally, PT Yamazaki

Indonesia has carried out the process of management, management and control

of accounts receivable based on verbal SOP (Standard Operation Procedure)

that has been set by the company, but in its implementation there are still a

number of things that are not in accordance with the SOP. To mitigate the

problem, the researcher had created the Flowchart for the base of the SOP.

B. Factors influencing the amount of accounts receivable, such as the

percentage of credit sales, Stuck Billing Customer, and collection business, PT

Yamazaki Indonesia have a large amount of receivables in the balance sheet,

mainly influenced by the large percentage of credit sales and collection efforts

undertaken.

C. Based on the analysis of financial performance in the company's financial

statements for the 2015-2017 periods, it shows that the company still has good

financial performance but when compared to PT Nippon Indosari Corpindo, PT

Yamazaki still loses. This is indicated by a number of positive financial ratios.

D. Debt control carried out by PT Yamazaki Indonesia has not run effectively

against the company's cash collection. This is evidenced from the results of the

61

cash conversion cycle analysis which is quite different from the CCC standard

issued by Costa. This means that the amount of receivables held is still quite

slow to convert into cash due to the existence of inhibiting factors such as

billing and not applying credit analysis (verbal) to customers.

5.2 Recommendation

A. PT Yamazaki Indonesia should recruit employees to cover the shortage of

employees in the financial & accounting division, which is expected to improve

performance, especially in the collection of accounts receivable.

B. PT Yamazaki Indonesia needs to improve its credit policy so that the credit

sales system and receivable management can be carried out better and make

appropriate decisions when the accounts receivable have begun to be

hampered.

C. PT Yamazaki Indonesia should do a system record return instead of using a

manual system (especially for return)

D. PT Yamazaki Indonesia should follow PSAK 55 / IAS 39, while the

presentation is regulated in PSAK 50 / IAS 32 and PSAK 1 / IAS 1 which

states that all the receivables should be provisioned.

E. Preferably, Receivable Accounts are recorded neatly and neatly by using a

system so that it creates a good presentation for investors.

62

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65

APPENDICES (INTERVIEW)

1. Engagement with Director, Manager & Supervisor:

The Researcher : Good morning to all of you (Mr. Frans, Mr. Jun and Ms.

Riska), I’d like to ask you several things regarding the research

that will be conducted here. First of all, I’d like to introduce

myself, my name is Jose Bonifacio Pakpahan, I’m from

President University Majoring in Accounting.

Mr. Frans : What do you want to ask, Jose?

The Researcher : So, Honestly I’m going to be conducting my research in

Accounting and Finance department, specifically in Accounts

Receivable.

Mr. Frans : Oh well, you can do it. Later Ms. Riska and Mr. Jun will help

you in gathering the data and things that you need for your

research.

The Researcher : Wow, that’s a very kind of you! Anyways, if possible, I’m

going to start the research next Monday, and if there’s anything

I can do to help, I will surely help, because PT Yamazaki

Indonesia has helped me as well right

Mr. Jun : Yes, you can start Jose, what data do you need?

66

The Researcher : I will need Financial Statements, Aging Schedule, Listing

Invoice and many documents related to Accounts Receivable.

The rules and regulations and SOP will be good too.

Ms. Riska : Unfortunately we don’t have SOP yet, maybe if you want, you

can make it for us. For the past couple years, PT Yamazaki

Indonesia only uses verbal SOP not written/ drawn one.

The Researcher : I will surely make it.

Mr. Frans : Okay Jose, Is there anything more you want to say or ask?

The Researcher : No sir, I think that’s all. Thank you so much.

2. Interview with Accounts Receivable (Supervisor):

The Researcher : Can you explain to me regarding the business process of

Accounts Receivable from beginning until the end?

Ms. Riska : Technically, PT Yamazaki Indonesia has procedures for

making credit sales to customers. The procedure carried out

involves several divisions within the company's management

functions. The most involved divisions are the marketing,

purchasing division and financial & accounting division. The

sales procedure begins with the issuance of a price quote letter

(Surat Penawaran Harga) from the marketing division to

customers. Then the customer will give a reply in the form of a

67

letter ordering goods or a PO (Purchase Order) to the marketing

division of PT Yamazaki Indonesia. After that, the PO letter is

received and processed by negotiation between the customer and

PT Yamazaki Indonesia. Negotiations are carried out by both

parties until they find a specific agreement, especially in terms

of payment and discount times. Then the agreement that has

been obtained is outlined in the form of an agreement signed by

both parties. After obtaining an agreement, then the ordered

product is ready to be sent. When the goods have been sent and

received by the customer, then the financial & accounting

division begins preparing documents to issue invoice invoices.

When an invoice is issued, there is usually a sales discount, but

in this case there is an exception namely the absence of sales

discounts for the whole. Sales discounts are only given to

certain customers who have a special relationship with PT

Yamazaki Indonesia, namely the Holding Company of the

company itself.

The Researcher : Ohh, so it’s like that. I want to ask regarding the control

system in Accounting and Finance department specifically in

Accounts Receivable. What do you think is the greatest

contributor of weakness here?

68

Ms. Riska : I think in PT Yamazaki Indonesia there is no weakness in

Accounting and Finance department, but if you want to know

about other things maybe I can help. Such manual recording of

Sales Return that is done by Toro, is I think that it’s not good.

Because several times Accounts Receivable team is confused

about the incomplete data for revising the returns and so on and

so forth.

The Researcher: Are there anything else you want to say?

Mss. Riska : I think that’s all from me, just a little thing to say that PT

Yamazaki Indonesia has done a great job in collecting the

receivables.

The Researcher : Well thank you very much, I appreciate your time and I’ll try

to check deeper later when I see the data. Thank you very much

for your favorable time.

69

APPENDICES (DOCUMENTATION)

1. Invoice

70

2. Proof of Receipt of Goods (Bukti Terima Barang)

71

3. Payments

3.1 Voucher Receipt

72

3.2 Invoice Receipt (Tanda Terima Faktur)

73

3.3 Invoice Receipt (Compiled)

74

4. Delivery Notes

75

5. Goods Received Receipt

76

6. Tax Invoice

77

7. Company Acceptance Letter

78

8. Company’s Confirmation Letter

79

9. The researcher with Mr. Frans (Director)

10. The researcher with Mr. Karno (HRGA General Manager)

80

11. The researcher with Finance, Accounting, Sales, Marketing and

Distribution Staff

12. The researcher with Mr. Furumi (Director)

81

13. The researcher with Mr. Ichiro Saito (President Director)

operational audit on accounts receivable (a case …

Documents