Evaluation of Cash Collection System on Financing without Collateral at PT. XYZ

Abstract

To meet their ever-changing financial needs, people employ various strategies, such as credit financing. PT. XYZ is a consumer finance company that offers financing without collateral (hire purchase). Hire purchase is significant unsecured financing offered when a consumer fails to pay, and the company has no guarantee whatsoever for the financing. Therefore, the accounts receivable must be well managed to reduce the risk of loss for the company. PT. XYZ’s income statements reveal that the value of the company’s bad debts continues to increase every year. Good internal control is needed to minimize the value of bad debts. This study aims to evaluate the internal controls in collecting receivables at the company, using risk management theory. This research uses descriptive qualitative method with case study approach. The data collection was carried out through observations and interviews. The results suggest that PT.XYZ can improve the standard operating procedure and internal control over its billing procedures. Keywords—risk management, financing without collateral, credit, internal control system, billing receivable system, standard operating procedure