Research on the Accounts Receivable Management Problems and Countermeasures of Gree Electric Appliances Co., Ltd.

Jiayi Gao

doi:10.71204/t99rtf66

Authors

Jiayi Gao Beijing City University Author

DOI:

https://doi.org/10.71204/t99rtf66

Keywords:

Gree Electric, Accounts Receivable Management, Credit Policy

Abstract

This study analyzes Gree Electric's accounts receivable (AR) management from 2019 to 2023 through financial data and industry benchmarking. Results indicate a surge in AR balances from CNY 8.44 billion to CNY 16.099 billion, with annual growth rates exceeding revenue expansion. The AR-to-revenue ratio rose from 4.26% to 7.89%, while receivables aged over three years increased to 14.34%, signaling deteriorating collection efficiency and elevated bad debt risks. Despite outperforming peers (e.g., Midea, Haier) in AR turnover ratios, Gree experienced a consistent decline from 24.44 to 13.19 times, highlighting liquidity strain. Key drivers include overdependence on credit sales for market share growth, inflexible recovery methods, outdated credit evaluation systems, and inadequate risk governance. Proposed solutions involve instituting credit sales caps, dynamic credit scoring models, tiered collection strategies, aging structure optimization (e.g., reducing >3-year receivables to industry-average 5.03%), and automated risk alerts. These measures aim to reconcile sales growth with financial stability, mitigate liquidity risks, and enhance operational resilience. The findings offer actionable frameworks for improving AR management in the home appliance sector, emphasizing data-driven credit policies and proactive risk mitigation.

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