Document Type

Article

Publication Date

11-15-1984

Keywords

agricultural economics, farm cooperatives, accounting, farm finance

Abstract

Accounts receivable represent a major operating expense for local cooperatives. For example, the average local Minnesota cooperative affiliated with a major regional cooperative in 1983 had 35 percent of their total current assets being accounts receivable and credit costs associated with accounts receivable represented 2.5 percent of the credit sales revenue. In contrast, local net savings were only 1.2 percent of sales. Effective accounts receivable management is particularly important in a period of financial stress in agriculture, high interest rates on borrowed capital and narrow local cooperative margins. This paper will review the actual accounts receivable management practices of local cooperatives in southwest Minnesota, eastern South Dakota and northwest Iowa in 1983. These practices will be reviewed relative to standard industry recommendations concerning accounts receivable management strategies. The paper will also provide ideas and suggestions that local cooperatives may consider in their efforts to implement successful accounts receivable management programs.

Publisher

Department of Economics, South Dakota State University

Series Number

84-9

Number of Pages

38

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