STUDY OF ACCOUNTS RECEIVABLE,

SERVICE RECEIVABLE -TO IDENTIFY

THE BACKLOGS AND SUGGESTIONS
TO REDUCE THE COLLECTION TIME
 Introduction To The Company
Started in 1953 Otis India was the first company to manufacture escalators,
elevators and travolators in India.
Otis Elevators Company (India )Limited was set up by M & M group and Otis
Elevators Company US.
In 1999 M&m sold it entire stake to Singapore based company .US Otis elevator
stake increased from 45 % -68%.
The company was incorporated as private limited company in 1953 and later on
converted to public limited company in 1972.
Otis Elevator Co(.India) is the market leader in domestic elevator industry.
Otis Elevator Co(.India) is a subsidiary of Otis Elevator Of USA which in turn is a
subsidiary of United Technologies Company.

Go to slide 10-project objectives

 Project Objective
 To determine the satisfaction level and reasons for delay in payments
in service receivables.
 To find out the problems and bottlenecks encountered by collection
agents during collection .
 To analyze the receivable problem and suggestions to reduce the
collection time –service receivable and accounts receivable.
 What is the relation between customer satisfaction for financial
terms and reasons for payment delay?
 To determine the external and the internal issues (within the
control of the organization) for delay in receivables and service
receivables.
Research Design
Questionnaires :-employees+customers
Indepth Interview with experts.
Go to slide 2 introduction.
Coverage: Delhi, Outer Gurgaon,faridabad
Sample size: 35 customers+10 employees
Accounts receivable process

B NOTE
C NOTE
H NOTE
FORM
Y3930
 Service Receivables
For one year free services are provided. After that there is a
price review (PR) :-
10%-comprehensive contracts.
12.5% non comprehensive contracts.
12.5 % for oiling and greasing& G)
15% for machines greater than 15 years
In case of comprehensive and non comprehensive contracts
there is 24*7 call back i.e. the customer can call any time as
per his requirements. In case of oiling and greasing contracts
call for complaints can be made only during working hours of
the business.
 DATA ANALYSIS AND INTERPRETATION

7 REASONS TO ANALYSE DELAY IN RECEIVABLES

 WRONG ADDRESS IN AMC
 INVOICE GENERATED AT 10% NEGIOTATED AT LESS
AMOUNT
 GOVT UNDERTAKEN FILE APPROVAL DELAY
 CUSTOMER PAYS AFTER COMPLETION OF SERVICES
 LIQUIDITY
 LONG PROCEDURE
 LEGAL ASPECTS

Go to conclusion-20
ANALYSIS:-In comprehensive contracts major reason is invoice
delay from head office Mumbai which can be looked upon for better
services.
 LIKERT DIFFERENTIAL SCALE
One-Sample Statistics
N Mean Std. Deviation Std. Error Mean

THERE IS REGULAR FOLLOW 35 4.00 .642 .108

UP
THE PROJECT IS COMPLETED 35 3.69 .631 .107
ON TIME
PROBLEMS ARE HANDLED IN 35 3.91 .702 .119
BEST AVAILABLE TIME

Is there regular follow up.

Strongly agree agree neutral disagree strongly disagree

4 mean value =4
 APPLYING T-TEST

Statement 1: Interest @21% on delayed payment is high.

Considering the test value as ‘3’, the significance value for the rating of this statement comes out
to be 0.000, which is less than the level of significance value (0.05). Also the mean difference is
1.314, hence the Alternate Hypothesis is accepted and it can be concluded that the respondents
significantly Agrees on the statement. This shows that the customer at the time of price renewal
finds the rate of interest a little high.
Statement 2: Long term AMC contracts are attractive.
Considering the test value as ‘3’, the significance value for the rating of this statement comes out
to be 0.000, which is less than the level of significance value (0.05). Also the mean difference is
1.457, hence the Alternate Hypothesis is accepted and it can be concluded that the respondents
significantly Agrees on the statement. This means that the customers find the long term
contracts attractive.
Statement 3: FOLLOWING TERMS ARE JUSTIFIED10% COMPREHENSIVE,12.5% O& G ,Machines 15%>15
YEARS OLD MACHINE

Considering the test value as ‘3’, the significance value for the rating of this statement comes out to be
0.8122, which is more than the level of significance value (0.05). Hence the Null Hypothesis is
accepted and it can be concluded that the respondents neither Agrees nor Disagrees on the
statement. Respondants carry a neutral view towards this statement.
 FACTOR ANALYSIS

Which factors should be used for analysing the best terms of payments
 Current system 30%, 60%.10%
 Free services for more than one year
 Attractive discounts in future
 Customer should have the power to negotiate.
 Payment for services should be made on adhoc basis only when they are needed.

COMMUNALITIES
CURRENT SYSTEM-30%,60%,10% 1.000 .925
FREE SERVICES FOR MORE THAN 1 YEAR 1.000 .936

ATTRACTIVE DISCOUTS IN FUTURE 1.000 .564

CUSTOMER SHOULD HAVE THE POWER TO 1.000 .840

NEGOTIATE

PAYMENT FOR SERVICES SHOULD BE MAD EON 1.000 .695

ADHOC
 Total Variance Explained

Component Initial Eigenvalues Extraction Sums of Squared Loadings

Total % of Variance Cumulative % Total % of Variance Cumulative %

1 2.142 42.840 42.840 2.142 42.840 42.840

2 1.818 36.366 79.206 1.818 36.366 79.206

3 .938 18.759 97.965

4 .102 2.035 100.000

5 3.480E-16 6.961E-15 100.000

Extraction Method: Principal Component Analysis.

YES
NO

Formula reserve, Formula reversal, Formula hit

 Conclusion and Recommendations
Internal issues

Double invoice generation delays the receivables .Only one invoice should be generated
from head office.
Issues involved with NS-25.
FR HIT problem.
Minimum Inventory Issues.
SSCA form to be filled by employees also delays the receivables.
T-order sales problem.
Local store audit,NSC audit problem.
Fixed lines of authority ,responsibility should be determined and accountability should be
clearly defined.
Decentralization is must .
Increase perks and incentives of employees.

Go to data analysis and interpretation-11