Poor account receivable management at saigontourist cable television company ltd (SCTV)

UNIVERSITY OF ECONOMICS HO CHI MINH CITYInternational School of Business ---TRAN VUN DAU POOR ACCOUNT RECEIVABLE MANAGEMENT AT SAIGONTOURIST CABLE TELEVISION COMPANY LTD SCTV MASTER

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-TRAN VUN DAU

POOR ACCOUNT RECEIVABLE MANAGEMENT AT SAIGONTOURIST CABLE TELEVISION COMPANY

LTD (SCTV)

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2020

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-TRAN VUN DAU

POOR ACCOUNT RECEIVABLE MANAGEMENT AT SAIGONTOURIST CABLE TELEVISION COMPANY

LTD (SCTV)

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Dr TRAN PHUONG THAO

Ho Chi Minh City – Year 2020

TABLE OF CONTENTS

EXECUTIVE SUMMARY 6

1 Problem Context 9

1.1 Company Overview 9

1.2 Company’ symptoms: Low profitability compared to competitors 12

2 Problem Identification 14

2.1 Possible problem 15

2.1.1 High account receivable 15

2.1.2 Bad financial leverage 17

2.2 Main problem validation 21

2.2.1 Bad financial leverage 21

2.2.2 High account receivable 22

2.3 Problem definition and Consequences 24

2.3.1 Problem definition 24

2.3.2 Consequences 24

3 Cause validation 26

3.1 Possible causes 26

3.1.1 Conflict between sales and accounting department 26

3.1.2 Unfavorable economic situation 26

3.1.3 Lack of account receivable monitoring system 26

3.2 Main cause validation 27

3.2.1 Eliminating conflict and economic condition as the main problem 28

3.2.2 Lack of account receivable monitoring system as the main cause 30

4 Suggested Solution 34

4.1 Alternative solutions 34

4.2 Solution selection 38

4.3 Action plan in organization 39

5 Supporting information 39

Appendix 51

Reference 59

LIST OF FIGURES

Figure 1: Organizational Structure Chart

Figure 2: SCTV’ profit in the period from 2015 to 2018

Figure 3: Competitors and SCTV’s Return of assets

Figure 4: Competitors and SCTV’s return of equity

Figure 5: Day debtors of competitors and SCTV

Figure 6: Leverage ratio of SCTV’s competitors

Figure 7: Interest expenses over revenue of competitors and SCTV

Figure 8: Initial map

Figure 9: Cause and effect map

Figure 10: Main Cause-Effect Tree

Figure 11: Alternative Solutions

LIST OF TABLES

Table 1: Net revenue, gross profit, profit before tax and net profit

Table 2 : SCTV’s Profitability ratio of SCTV in the period 2015 to 2018

Table 3: Receivables Turnover Ratio of SCTV, FOX and VNPT

Table 4: Receivables on total assets of SCTV, FOX and VNPT

Table 5: SCTV’s Provision for bad debt the period from 2015 to 2018

Table 6: Leverage ratios of SCTV from 2015 to 2018

Table 7: Leverage ratios of SCTV from 2015 to 2018

Table 8: SCTV’s leverage ratio in the period from Q1/2019 to Q3/2019

Table 9: SCTV’s Account receivable on total assets

Table 10: Results of customer debt collection in February 2020 (target for 03/2020)

Table 11: Results of customer debt collection in march 2020 (target for 04/2020)

Table 12: Results of customer debt collection in april 2020 (target for 05/2020)

Table 13: Estimated cost for software

Table 14: Estimated cost for hiring

Table 15: Action Plan

EXECUTIVE SUMMARY

SCTV is a cable TV service enterprise in Vietnam The company provides services to customers and charges TV service fees Therefore, commercial credit affects the level of investment in assets and has a significant impact on a company's profitability and liquidity Trade credit improves sales for the company and can therefore be more profitable but overinvesting in receivables may be costly due to the increase in investment in existing assets

It could signal the acceptance of deferred payment customers

In the telecommunication services in general and SCTV in particular, account receivable management is a key factor This report showed that the account receivable management in SCTV will be impacted by many causes The causes we have found due to a part of lack of monitoring system, those are the support in solving receivable’s problem as well

as reporting, tracking customer receivable, supporting staff, eliminate unnecessary information If the account receivable management in SCTV is better than in the past will improve costs and keep customers leading to higher profit margins, ROA and ROE ratios of the company will also be improved

High account receivable at SCTV probably led to customer loss in the future and is considered as an urgent problem and the “Lack of account receivale monitoring system” is the main cause that needs to be solved immediately Some solutions have been made in order to gain more receivable of customers After considering some related things of two solutions like benefits, costs as well as the advantage or disadvantage, the best solution for SCTV in this case establish a receivable monitoring software system based on the advantage of low cost If the course is well-designed and get the expected result, it not only solves the whole problem of SCTV for all time of year but also can be applied to the other brand with the same problem

The project will begin in June, 2020 until the end of september, we expect the project will achieve the best results as desired Although, the time of researching, conducting and analysis is limited, the result of this report is that the lack of monitoring software system, this

is a small contribution to improve receivable of SCTV

ACKNOWLEDGEMENT

This thesis becomes a reality with the support and assistance of many individuals I want to send my sincere thanks to all of them First of all, I would like to express my gratitude and sincerely thanks my adviser, Dr Tran Phuong Thao for her guidance, imparting knowledge and expertise to my studies Special thanks to the members of SCTV company for cooperation, support and provide necessary information realated to this thesis My thanks and appreciation also came to my teammates who have collaborated with me to complete the thesis and my classmates who are ready to help me with their abilities Last but not least, thanks for my family who always support and encourage me to complete this thesis

1 Problem Context

1.1 Company Overview

Saigontourist Cable Television Company (SCTV) with 51% equity of Vietnam Televison and 49% equity of Saigontourist SCTV provide services pay television, telecommunications, Research development and application of advanced technologies in the field of pay television, media and information technology Internet on television transmission system pay, advertisement, TV Online, Game

SCTV is one of the leaders in cable television industry in Vietnam during 20 years build-up, development and broadcast nationwide At the end of year 2014, SCTV has become

a market leader in Vietnam with more than 2,500,000 cable television subscribers, 500,000 digital cable television subscrib-ers, 300,000 Internet subscribers, 100,000 VoIP subscribers and 50,000 VoD/OTT subscribers

The company has over 3200 employees including operating managers experts, engineers and many experienced staffs who have been contributing their enthusiasm, dynamic and creativeness to SCTV’s vision

- 60% of editors, engineers, reporters who have postgraduate degrees of all staff employees

- 10% of all staffs will be qualified for Master degrees

The achievements that SCTV has achieved

- Producing television program based on technology of data storage center

- Applying and deploying the DOCSIS 3.0 technology to develop services of IP VOD, increasing speed of internet access twice

- Launching VoD service, timeshift TV for 3 types of display such as TV, LCD and Portable devices

- Developing technologies G-PON, EPON for providing internet service to business firms

- Developing information technology in managing and operating businesses

- Upgrading SCTV cable network at Ho Chi Minh City to 1 GHz in order to develop converged service and also building rigorous standard of cable network installation

The company aims to following the below objectives

- Focusing digitization and subterranean of television cable network

- Covering 100% television cable network in whole the provinces and cities of the central government with over 4 million subscribers

- Leading application of digital television technology

- To keep leading in the paid television industry

- Becoming the SCTV Group to diversify service in which telecommunication service and information technology is core value There are many premium services that provides such as Digital TV, 3D TV, DTH, Mobile TV, WebTV, OTT, objected-orient advertising, Home Shopping Internet, Leased Line, VoD, VoIP, Smart Home Networking, Game Online, GameTV, developing Software, training television human resource…

SCTV is a strong driving force, continuing effort in order to be a leader of cable television industry in Vietnam As the premium service provider, all members of SCTV have

to understand that satisfaction of every customer is our great pleasant and enthusiasm of SCTV’s development

Figure 1: Organizational Structure Chart

1.2 Company’ symptoms: Low profitability compared to competitors

By analysing recent financial reports of SCTV, there are some issues which is worthy to concern:

Table 1: Net revenue, gross profit, profit before tax and net profit

The table shows that the profit decreased significantly from 2015 to 2018 with a steady decline of profit after tax that reached VND 82.119 billion in 2015 while it was negative VND 46.233 billion in 2016 and continue decreased in 2017, although 2018 increased to 43.178 billion, but not significantly The EPS showed down-trend in 2015 to 2018, in 2015 EPS reached VND 1.866 but in 2018 is VND 944

The figure below shows the overall picture of decrease of profit from 2015 to 2018:

Figure 2: SCTV’ profit in the period from 2015 to 2018

PROFITABILITY RATIO,

Table 2 : SCTV’s Profitability ratio of SCTV in the period 2015 to 2018

The table shows that the profitability of SCTV In 2015, the ROA of 3.7% means that every 100 VND capital of the enterprise will generate after-tax profit of 3.7 VND While every

100 VND capital in 2016 decreased to 1.8 VND and in 2017 is 1.3 VND Although in 2018 it increased equally 1.8 VND but not significantly In addition, it can be seen that the return on equity decreased from 13.6% in 2015 to 6.9% in 2018 which means that in 2018 each 100 VND

of equity generated had just generated 6.9 VND profit

Figure 3: Competitors and SCTV’s Return of assets Return on asset is another indicator showing how efficiently the assets of the company

is being utilized As evident, all the companies are consistent over the years in utilization that can easily give an idea about the general behavior of construction industry in such ratios as consistency shows a healthy market for all the companies Because SCTV's profit margin is low, lower profit leads to SCTV's ROA lower than telecommunications competitors that included FPT, Viettel and VNPT The ROA of competitors increased sharply in the period

before 2016, but from 2016 to 2018, there was a strong downward trend, indicating that the telecommunications competitors is in a saturated trend

The ratio expresses the net income to average shareholders’ equity as a measure of percentage The chart above shows very clearly its less attraction to the investors as its return

is decreasing over the years, although SCTV has consistent rates over the years But this rate

is small compared to competitors industry The return on equity increased decreased from 13.6% to 6.9% When compared with the average ratios of the competitors in Telecommunications including FPT, Viettel and VNPT, the competitive data showed better performance of ROE of the companies compared to SCTV

2 Problem Identification

In order to understand clearly the SCTV’s profitability performance, I conduct a company analysis by calculating key group of financial indications: including liquidity, leverage asset ultilization, profitability I figure out 2 possible problem:

 High account receivable

 Bad financial leverage

2.1 Possible problem

2.1.1 High account receivable

Accounts receivable is an important aspect of a businesses Accounts receivable (AR)

is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers Accounts receivables are listed on the balance sheet as a current asset A/R

is any amount of money owed by customers for purchases made on credit Accounts receivable

is an asset of company, it’s an asset account on the balance sheet, accounts receivable are created on credit

Accounts receivable management is a key component of the working capital management of any company Once a company gives credit to their customers it must be aware

of its exposure to risk such as bad debt, Adusei (1) Kontus (10) Accounts receivable management includes establishing a credit and collections policy Accounts receivable management directly effect on the profitability of SCTV

- Good receivables management leads to a decrease in provision for bad debts leading to

an increase in profit margin

- Good receivables management leads to low receivables leading to high ROA

- Good receivables management will not lack working capital

Table 3: Receivables Turnover Ratio of SCTV, FOX and VNPT

RECEIVABLES / TOTAL ASSETS 2015 2016 2017 2018

SCTV

FOX

VNPT

Table 4: Receivables on total assets of SCTV, FOX and VNPT

The performance of accounts receivable is measured in terms of days of revenue outstanding, a measure of the number of days required to convert a dollar of receivables into a dollar of cash state by Newton (10)

Figure 5: Day debtors of competitors and SCTV

Trade debtors share a major part in total current assets of SCTV This is an important indicator for SCTV, especially SCTV provides telecommunication services for customers to use first and then pay later while competitors such as FPT and Viettel, VNPT have a payment policy first month The above policy has a great impact on the debt situation of SCTV, based

on the table above, it is clear that the debt ratio of SCTV is lower than the competitors industry average by 2018 to 52.07 days

Day debtors

SCTV Competitors

Table 5: SCTV’s Provision for bad debt the period from 2015 to 2018

According to the chief accountant of SCTV – Ms Cuc who said that

“Account receivable is a very important item for SCTV If this section is increasing and not well managed, it will greatly affect SCTV's business In the field of operation with a high level of competition today, it is even more important, failing to collect customers' debts,

it means that loss of revenue leads to business profits of enterprises in the period of decline”

Through analysis of SCTV's business policies, data on cost of installation for an initial customer was collected as follows:

Installation staff cost: 100,000 / customer

Customer marketing expenses: 90,000 / customer

Modem, wireless cost: 990,000

Costs of other arising supplies: lines, F5, Jack TV

Although, according to the regulations, when customers stop using it, the costs of modem and wireless must be returned to SCTV but through actual statistics, customers do not return, causing great damage

Thus, we can see that, the issue of customer receivables greatly affects SCTV's business activities If the company increase account receivable, the revenue decreases, the cost increases and leads to the decrease of SCTV's profits

2.1.2 Bad financial leverage

In the study of Perinpanathan (13) the findings show that there is negatively and significant relationship between return and volatility change In most cases, highly levered industries had a stronger negative relationship between return and volatility change than the less levered industries The employment of debt in the capital structure of the companies may

make a negative impact on the performance Futhermore, Gitman (8) suggested that the firm’s capital structure directly affects its financial risk, which is the risk to the firm of being unable

to cover required financial obligations The penalty for not meeting financial obligations is bankruptcy

Table 6: Leverage ratios of SCTV from 2015 to 2018

The ratio indicates how much assets are available to set off total debt This provides the investor with general ideas about how a company’s pay off its liabilities The lower it is, the less leverage a company uses and the stronger its equity is The higher this ratio is, the more financial risk one company will be considered to take

Generally, SCTV Continuously increasing debt to finance the operation of the whole company so the ratio of notes payable to equity increased from 2015 to 2018 respectively 60% and 124%, the good point at SCTV is that although notes payable of equity ratio increased but debt ratio remained stable around 74%

As the table shows out, ICRs are getting higher year after year in the period from 2015

to 2017 for SCTV The interest coverage ratio is used to determine whether it is easy or not for

a company to pay their debt in term of its earnings before interest and taxes during the interest payments within the same period According to theory, the minimum Interest Coverage Ratio

is 2 Based on the value in the table above SCTV has high ratio in Interest Coverage in all four years, higher than the minimum However, trend is not good for SCTV

Figure 6: Leverage ratio of SCTV’s competitors

According to the chart above, we see that the liability to assets ratio of SCTV is lower than the competitors average, this is a positive point, but the company increased its debt over the years when the liability to equity ratio amounted to 321% in 2016 and slightly decreased

by 309% in 2017, although 2018 decreased to 289% but still much higher than the telecommunications industry average

Figure 7: Interest expenses over revenue of competitors and SCTV

Because from 2015 to 2018, SCTV continuously increased both short-term and term notes payable, but revenue did not grow highly, interest expenses over revenue increased sharply, comparing to 2018 increased by approximately 3 times compared to 2015 and tends

long-to increase over the years Meanwhile, the competilong-tors in the telecommunications such as, FPT Telecom and VNPT is lower than 1 This is also one of the main reasons why SCTV's Net profit margin is lower than the industry average

Ms Hieu who works as a financial manager of SCTV said that:

“Financial leverage is a measure of whether a capital appears in the form of debt or assesses a company's ability to meet its financial obligations Too high borrowing can make it difficult for a company However, if a company's operation can generate a higher return than the interest rate for its loans, then the debt can help spur growth”

She also pointed out two main reasons for SCTV's current high debt:

- Firstly, the underground power grid and communications cables led to the company having to borrow to fund underground projects

- Secondly, SCTV is a limited liability company with only 2 shareholders so funding is mainly from bank loans to invest, in addition there are many projects that need to be implemented to expand investment for customers but completely from bank loans

Initial map / Problem mess

2.2 Main problem validation

2.2.1 Bad financial leverage

According to Obradovich, John and Gill, Amarjit (12) Maximizing shareholders’ wealth is one of the corporate goals that cannot be ignored The market value of the firm is an important measure of the shareholders’ wealth Corporate governance and financial leverage play a big role in maximization of shareholders’ wealth higher financial leverage decreases firm value by increasing financial risk

Cuong and Canh (5) found that the optimal debt ratio (total debt to total assets ratio) should not exceed 59.27% because a higher debt ratio negatively impacts firm value

Increase day debtor

Increase account receivable

High account receivable

Increase provision for bad debtsLow profitability

ratio

High leverage ratio

Bad financial leverage

High coverage ratio

LEVERAGE RATIO 1/2019 2/2019 3/2019

Table 8: SCTV’s leverage ratio in the period from Q1/2019 to Q3/2019

However, compared to table 6 this ratio currently tends to decrease in recent quarters

of 2019, specifically, the total debt to total assets ratio decreased from 0.74 in 2018 to 0.71 Another positive point is that the debt to equity ratio dropped sharply, the notes payable to equity ratio decreased to 1 Although the current capital structure does not reach the optimal point, it shows positive efforts of the company to manage leverage efficiency in 2019 It is also confirmed by Ms Hieu, Financial Manager who shared that

“We recently recognize negative effects of the financial leverage on our company Therefore, we are trying to manage the debt ratios by reduce short-term debts at commercial banks, optimize low-interest loans.”

2.2.2 High account receivable

By conducting some analysis on financial statement and interviewing some key members in SCTV, it could be seen that the ratio of account receivables to total assets of SCTV increased continuously and reached over 21% in the third quarter of 2019 while the end of 2018 was only 14.8%

Account receivable/total

Table 9: SCTV’s Account receivable on total assets

According to Mr Thong, Deputy Director, who shared that

“The issue of account receivable management is very important if not solving the problem, it will lead to losing customers, customers will turn to competitors.”

Ms Cuc who is Chief Accountant also said the same opinion with Mr Thong:

“Failing to collect customers' debts, it means that loss of revenue leads to business profits of enterprises in the period of decline”

In addition, Ms Hieu, who is Financial Manager, said that:

“Account receivable a big problem for SCTV, increase account receivable will lead to lack of cash to pay for business expenses as well as will increase SCTV's bad debt When the bad debt increases, the company will have to make provisions, leading to increased costs because it is the main cause of bad debt However, in SCTV, it will lead to a lot of effects on revenue and costs, but further away is the loss of customers, customers will switch to other service firms because of the big competition currently”

She also mentioned reducing the leverage ratio of SCTV depends on the business situation of SCTV because when cash flow from customers means that account receivable to

be lowered, SCTV will have enough money to pay for banks In addition, there is a way to issue an increase share capital of equity to reduce leverage ratio, but this is very difficult, because SCTV is currently owned by the state, so the submission of the plan to change the business model as well as issuance to increase capital will take a long time

Furthermore, Mr Huy, Head of Sale department, said that:

“In the current situation, the issue of managing account receivables is currently very difficult for Ho Chi Minh City When receivable from customers more than 3 months, it is compulsory to stop providing services to customers Using cable television network and internet is an essential demand, customers will switch to use other competitors such as VNPT, FPT, Viettel A major problem in the Sales department is that receivables from customer will greatly affect the salaries of the employees who collect subscription.”

Based on actual data and direct interviews with key members currently managing customer receivables and financial management, the author concludes that , poor A/R is the

most important and urgent to solve this problem as soon as possible and need to solve thoroughly Therefore, account receivable management is the main problem

2.3 Problem definition and Consequences

2.3.1 Problem definition

According to Adusei (1) “One of the purposes of setting any business is to maximise 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” Accounts receivable is the money that a business has a right to receive after a certain period of time when the business has sold goods or services on credit” mentioned by Adusei (1)

The businesses usually have invested money in selling a product or delivering a service After selling the goods, the inventories reduces and in turn businesses need an asset to balance the financial statements According to Fabozzi and Peterson (7) whenever a company decide

to sell to customers on credit it create accounts receivables Either that assets are cash-in-hand

or receivables in case of credit sales as accounts receivables form a major part of the organization’s asset, it leads to the generation of cash in-flow in the books of the organization

2.3.2 Consequences

High account 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 ant the sustenance of the company stated by Adusei (1) in addition, Sharma and Kumar (15) who find

a positive relation between ROA and accounts receivables

Baveld (2) studies that a statistically significant negative relation between accounts receivables and gross operating profit during non-crisis period On the other hand, during crisis period, no significant relation between these two variables is observed This result may suggest that the relation between accounts receivables and firm’s profitability is changed

in times of a crisis in the way that some firms should not keep their accounts receivables at minimum in order to maximize profitability during crisis periods

At SCTV, the management of receivables is very important, and it is crucial to the company's business performance and business plan targets According to the deputy director, the issue of collecting customers is very important if not solving the problem, it will lead to losing customers, customers will turn to competitors Because customers cannot be used for more than 3 months without collecting money If more than 3 months if customers do not pay, then the service must be stopped When the service is stopped, customers will switch to viettel

or FPT, VNPT networks to use The need for cable TV and the internet today is essential for work and entertainment

“Increase account receivable will lead to lack of cash to pay for business expenses, it also lead to a lot of effects on revenue and costs, but further away is the loss of customers, customers will switch to other service firms because of the big competition currently” told by

Ms Hieu

Kontus (10) mentioned Receivables represent a fairly large proportion of the assets of most companies Investments in receivables, especially for manufacturing companies, represent a significant part of short-term financial management Companies often sell goods and services on both cash and a credit facility Companies would rather sell for cash than credit, but competitive pressure forces most companies to provide credit Extension of commercial credit leads to the establishment of accounts receivable Accounts receivable represent credit sales that have not been collected When customers pay for these accounts, the company receives cash in connection with the initial sale If the customer does not pay an account, a bad debt loss

3 Cause validation

3.1 Possible causes

3.1.1 Conflict between sales and accounting department

Burez & Vandenpoel (3) told that with regards to attracting new customers, retailers want to promote sales as much as possible, Sales will be rewarded on every tip of the product they sell However, whether the customer is reliable or not? the legal department dealing with early termination, credit deapartment related that deals with arrears - are the victim of this overzealous selling

According to Scherr (17)the benefits that credit managers are largely to restrict sales especially those risky customers even those sales are profitable

3.1.2 Unfavorable economic situation

Psillaki and Eleftheriou (14) In the context of economic worsening, companies tend to switch from bank credit to commercial credit Smith (18) the level of customer receivables can

be determined by the overall economic situation of the market The worsening economic situation could greatly affect trade receivables, furthermore, when the economic situation is not satisfactory banks will reduce credit lending to companies Therefore this credit will not

have will affect the receivables mentioned by Garc´ıa-Teruel and Mart´ınez-Solano (9) 3.1.3 Lack of account receivable monitoring system

In theory, Subramanyam (16) told that the significance of receivable turnover ratio is the number of time which are accounts receivable collected in the year and the efficiency using working capital of a company The increasing in day sales outstanding ratio showed that the company managed accounts receivable ineffectively and took more time to transfer accounts receivable into cash This is a sign that the company has difficulty to collect the credit sales Subramanyam (16) also indicated that there are many factors which impact to the amount of accounts receivable, but the amount of credit sales has directly impacted to this account.Stach (19) told that In order to maintain liquidity finance, it is important to be flexible and ready to

provide a management system with innovative financial risk management methods and tools,

in particular preventive measures and minimize it In today's economic environment, a

company is subject to many changing conditions that's why the only effective tool is a

systematic approach, Stach (19)

In the current context, businesses sell goods and services in the form of commercial

credit, leading to accounts receivable accounting for a large proportion of working capital in

order to increase revenue, namely the volume of goods supplied to customers In such

conditions, according to Stach (19) a complete lack of risk management program or an

individual approach to the management of receivables /liabilities in these companies,

management decisions are

subject to a higher risk of error and therefore negative influence to a company Gitman (8) Two

frequently used techniques for credit monitoring are average collection period and aging of

The conflict between

accounting and sales

department

Unfavorable economic

High account receivable

3.2 Main cause validation

3.2.1 Eliminating conflict and economic condition as the main problem

Unfavorable economic situation

According to economist William (20) Retailing completely depends on the conditions

of the local economy It cannot grow greater than the income available in the economy It will decrease if cash flow into an area is reduced Danis et al (6) concluded in their research: “The good economic situation and living standards is also reflected positively on the increasing for services and products”

According to Mr Thong who is Deputy Director said that:

“In the current practical context Compared to the average of the competitors in the telecommunications industry in line with the competitors such as: FPT Telecom Joint Stock Company (FOX), Vietnam Posts and Telecommunications Group (VNPT) trend in 2018 The competitors also tended to increase this year Overall, the overall business situation of the telecommunication industry is highly competitive Industry revenue has reached saturation point and is on a downward trend”

Garc´ıa-Teruel and Mart´ınez-Solano (9) found that a positive relationship between accounts receivable and economic growth, but the economic impact of this variable is limited Besides that, according to the company's chief accountant: “In the telecommunications industry, this is considered a basic industry for customers' lives The negative impacts of unfavorable economic situation have already existed in STCV but this issue is undeniable and hard to be controlled by the company”

Furthermore, ccording to Ms Hieu who is Financial Manager said that

“The situation of the economic situation is complicated, at present, the forecasting and analysis departments are making efforts to forecast making recommendations to prevent risks But this is difficult, the company cannot control it all.”

Based on the arguments, it could be stated that unfavorable economic condition is a real cause but is not a main cause existed in the company

The conflict between accounting and sales department

Through interviews with chief accountant, the conflict between Accounting and Sales department sometimes occurred because SCTV in the debt collection process, accountant usually has to work directly with your sales staff However, when she works with customers, she does not know the progress of the work you are doing But difficulties or problems do not report in time Sometimes the work of the accountant she does not keep up, it will happen errors

Burez & Vandenpoel (3) conclusion that could be reduce conflict between sales and accounting department if there are appropriate standards to evaluate the customers and sales department will target on credit worthy customers, does not set up the specify credit analysis procedures There are no standards to classify customers which are basis for sale department in finding out the appropriate customers

According Ms Cuc, who is Chief Accountant, said that sales of SCTV come from two main customers: hotels, apartments and retail customers The company clearly distinguishes how this segment of customers and household customers collect money The way to collect debts will be different

Mr Thong who is Deputy Director also said that:

“At Cable TV when customers need it will usually be installed quite easily because SCTV is running targets for the sales department However, according to company policy, there will also be classification of customers who have used SCTV's services For example, if they have had previous debt history, if the customer has just stopped using the service 6 months ago, SCTV will not allow for new installation but only have the subscriber resumed for continued use Hotel is classified according to the criteria of the state regulations because it

relates to copyright of TV channels For example, 5-star SCTV hotel invested in Pullman Hotel, Sheraton Hotel, Ben Thanh Rex Hotel”

Moreover, Ms Cuc who is Chief Accountant said that

“The conflict between has also reset the process and gradually improves Specifying policies and procedures The current policy in SCTV is that each quarter will be changed to suit the management, which helps the debt management issue to be better.”

In conclustion, the above information gathering from the interviews shows that the conflict between departments is not an important factor associated with customer receivables management problem at SCTV

3.2.2 Lack of account receivable monitoring system as the main cause

In the paper of Adusei (1) mentioned the lack of effective monitoring measures has a positive relationship with debt monitoring and is therefore able to address debt collection challenges to a significant extent A positive coefficient indicates that the increase in effective monitoring measures will have a corresponding improvement in debt monitoring and may accelerate by debt repayment The effective process of monitoring and controlling customer accounts can lead to important information for the company to contact customers to resolve debt issues in the earliest stage According to Gitman (8) “The issue a firm should consider in its accounts receivable management is credit monitoring” Similar to the above point of view, Tracking low-paying customers is an important function of the credit department by Kontus (10)

Credit monitoring is an ongoing review of the firm’s accounts receivable to determine whether customers are paying according to the stated credit terms If they are not paying in a timely manner, credit monitoring will alert the firm to the problem Slow payments are costly

to a firm because they lengthen the average collection period and thus increase the firm’s investment in accounts receivable