Registered: 1517239643 Posts: 1
Reply with quote #1
Recently, I got access to a pretty comprehensive company model, that clearly distinguishes between accounts receivables and payments received. If I run the model several times, I can show the effects of changes to the average revenue collection time, which is already quite interesting. However, far more interesting would be to change it during a single run, e.g. assuming payment delays that cause problems for liquidity. Let's say the customers suddenly pay a few weeks later than usually. Paying the monthly bills could become a problem. Unfortunately, the model is not able to reflect these changes cause it uses a delay-function that simply calls values from the past. If you increase the avg collection time, the model thus collects money that actually already has been collected. If you decrease it, the model "jumps" ahead and skips some of the receivables entirely. I've tried already a couple of ideas to solve this, but without any success. E.g. I created a stock for the policy change and another for the effective rev collection time, i.e. when the collection of receivables pertaining to the old policy has been finalised. I hope I expressed the issue in an understandable way. If somebody has an idea or some feedback on this, I'd highly appreciate it! Thanks in advance and all the best, Richard
Registered: 1386343189 Posts: 108
Reply with quote #2
The accurate way to model this is to set up a pipeline of aged-debtors... 1-week, 2-week and so on. Each week, debtors in the week-1 stock flow to week 2 and so on. You then extract payments received from whichever Stock corresponds to the current payment delay,
plus all later Stocks [so if delays fall from 5 weeks to 4, you collect both 4-week and 5-week debtors at the point in time when that happens. A pipeline for all weeks may be a nuisance if, say, you never expect to be paid before week-4, so the first Stock could be total week1-4 debtors, with of course a 4-week delay between in- and out-flows.