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Accounts Receivable Management Case Study

Receivables Management in a Public Limited Company - A Case Study

International Symposium on, “Management Research”, Bharathidasan Institute of Management, Trichy, Tamilnadu, India, February 2008

10 PagesPosted: 25 Apr 2011Last revised: 14 Mar 2013

Date Written: April 22, 2011


No business can be successfully run without adequate amount of working capital which is concerned with two factors namely, current assets to be held and the type of assets and the methods by which these assets are financed. This occupies much of the finance managers’ time in taking decisions. Investment in current assets represents a very significant portion of the total investment in assets. The finance managers have to be very careful, while making any investment decisions especially short term i.e. working capital. Empirical results show that ineffective management of working capital is one of the important factors causing industrial sickness.

There is a direct relationship between a firm’s growth and its working capital needs. As sales grow, the firm needs to invest more in inventories and debtors. The finance manager should determine levels and composition of current assets, which will help to run the business smoothly. Account receivables are one of the major components of working capital. Receivables are a direct result of credit sales. The sale of goods on credit is an essential part of the modern competitive economic system. The objective of credit sales is to promote sales and thereby achieving more profits. At the same time, credit sales result in blockage of funds in accounts receivable. Moreover, increase in receivables will increase the investments and also increases chances of bad debts. Hence, if the receivables is managed effectively, monitored efficiently, planned properly and reviewed periodically at regular intervals to remove bottle necks if any, the company cannot earn maximum profits and increase its turnover. With this as the primary objective of the study, the study made an effort to assess the receivables management. This study concludes that the efficiency of the receivables management of this company was satisfactory.

Keywords: Receivables Management, Current Assets, current Liability

JEL Classification: Accounting

Suggested Citation:Suggested Citation

Kannadhasan, M., Receivables Management in a Public Limited Company - A Case Study (April 22, 2011). International Symposium on, “Management Research”, Bharathidasan Institute of Management, Trichy, Tamilnadu, India, February 2008. Available at SSRN: https://ssrn.com/abstract=1819024 or http://dx.doi.org/10.2139/ssrn.1819024

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Case Study on Accounts Receivables Management & Medical Billing

The Customer:

An Urgent Care practice in Maryland.

The Challenge:

O2I was initially approached by the clinic to take care of Account Receivables Management. The client was also facing a problem on the billing side like:

  • The billing was not completed within 24 hours
  • Steep Decrease in collections
  • Poor quality of work done by in-house billers

The Client wanted to hand over the billing side to us in 2 months if he gets satisfied with our ability on the AR Management (we did a good job and the owner of the clinic handed over the billing part as promised).

We had to use a new software namely AdvancedMD for carrying out the operations. We got cross-trained over phone on the practice management software.

The Project:

  • To provide Full Service Billing.
  • To handle average of 700 claims every month

The Solution:

The following measures were taken to improve collections and productivity:

  • A dedicated Account Manager and Team were deputed to handle the clients account
  • The team consisted of full time employees for medical billing, medical coding and an AR expert
  • Evolved a medical billing process and an AR process to make sure that billing takes place within 24 hours
  • Follow-up on denied claims
  • Address issues with insurance company and get them resolved
  • Maintain knowledge base of issues and solutions

The Results:

By outsourcing their medical billing functions to O2I, the CLIENT was able to:

  • Witness that the average AR days were brought down from 34 to 23 days within 6 months
  • Witness that the collection percentage increased from 53% to 61% within 6 months
  • Have significant improvement in the cash flow as a result of increase in collection ratios
  • Concentrate on patient care and see more patients, with the availability of more time, and a clutter free office
  • Decrease reliance on employees and eliminate fluctuations associated with backlogged claims and employee turnover
  • Increase operating efficiency and reduce administrative costs

Please see the graphs below:

Progress since we started



Progress since we started

Collections % (rolling 6 months)





Progress since we started

Average A/R Days





Progress since we started

A/R over 90 days as % of total





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