For this ACCA AFM & FM blog,let’s look at debts !

This is debts owed to the company. Money owed from customers. Receivables management.

For FM students, this is a key topic. Certainly one of the most tested across all three sections.

As far as the objective test questions are concerned, it’s mainly about settlement discounts & the APR calculation. The examiners like this a lot.

For the Section C it’s the substantial theory combined with the classic requirement – evaluation of a change in the receivables policy.

The former is solved for all students by my ACCA FM TheoryWise notes & podcasts – theory subsumed!

The calculations need one approach – to compute the gain or loss in annual cash flows from the ‘old’ to ‘new’ policy. Use a linear approach on the ACCA spreadsheet.

Have a working for the change in finance costs. I recommend the method of stating old vs new:

1) Receivables Days

2) Receivables Value

3) Finance Cost

This keeps things simple.

Know your receivables management well & your prospects of passing ACCA FM will be far greater.