A Model of Accounts Receivable Risk Management for Bosnia and Herzegovina's Business Environment

Proceedings of 7th International Conference «Economic Integration, Competition and Cooperation», 2-3 April, 2009, Opatija, University of Rijeka – Faculty of Economics, CD with Full papers

11 Pages Posted: 24 Mar 2013 Last revised: 22 May 2013

See all articles by Dara Ljubić

Dara Ljubić

University of Mostar - Faculty of Economics

Davor Mance

University of Rijeka

Date Written: April 2, 2009

Abstract

The paper deals with accounts receivable collection risks in Bosnia and Herzegovina. The conducted research and analysis of existing models of accounts receivable collection risks, created a new model of collection risk management suitable for the business environment found in Bosnia and Herzegovina. The model is also applicable in other similar transition economies lacking the modern market economy features. No risk management model can replace a fully functioning legal and economic system. Implementation of reforms in all areas is a fundamental condition for solving these problems. Nevertheless, a well designed accounts receivable risk management is an appropriate transition management tool that may create the preconditions for recovery. The proposed model is based on cash flow indicators, working capital and asset ratios, current and quick ratios, and debt-equity ratios. It is optimal in assuring against accounts receivable payment risks in Bosnia and Herzegovina, as it was based on Bosnian financial statements data, and collateral and insurance instruments in usage in the country.

Keywords: accounts receivable risk management, liquidity risk, illiquidity, cash generation, accounts receivable collection, transition

JEL Classification: M41, G30

Suggested Citation

Ljubić, Dara and Mance, Davor, A Model of Accounts Receivable Risk Management for Bosnia and Herzegovina's Business Environment (April 2, 2009). Proceedings of 7th International Conference «Economic Integration, Competition and Cooperation», 2-3 April, 2009, Opatija, University of Rijeka – Faculty of Economics, CD with Full papers . Available at SSRN: https://ssrn.com/abstract=2237444 or http://dx.doi.org/10.2139/ssrn.2237444

Dara Ljubić

University of Mostar - Faculty of Economics ( email )

Bosnia and Herzegovina

Davor Mance (Contact Author)

University of Rijeka ( email )

Hahlic 6
Rijeka, 51000
Croatia

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