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DIVINE WORD COLLEGE OF LEGAZPICOLLEGE OF BUSINESS EDUCATIONAccountancy DepartmentLegazpi City

CERTIFICATION OF THE EDITOR

This is to certify that the thesis entitled, “RECEIVABLE MANAGEMENT

PRACTICES OF SELECTED CABLE TV SERVICE PROVIDERS IN LEGAZPI CITY”

prepared and submitted by KATHLEEN B. BATALLER and REINA D. LAYSON, for the

degree of Bachelor of Science in Accountancy has been edited by the undersigned, and

reviewed to conform to the institutional format of Divine Word College of Legazpi,

College of Business Education and elements of technical writing.

Issued this _____ day of __________, 2013 at Divine Word College of Legazpi,

Legazpi City.

TRESSA ADELFA M. MORTOLA, CPA, MPA Editor

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RECOMMENDATION FOR FINAL ORAL EXAMINATION

This thesis hereto attached entitled “RECEIVABLE MANAGEMENT


prepared and submitted by Kathleen B. Bataller and Reina D. Layson, in partial

fulfillment of the requirement for the degree of Bachelor of Science in Accountancy is

hereby submitted to the Thesis Committee for consideration and approval.

TRESSA ADELFA M. MORTOLA, CPA, MPAThesis Adviser

THESIS COMMITTEE

In partial fulfillment of the requirements for the degree of Bachelor of Science in

Accountancy, this undergraduate thesis entitled, “RECEIVABLE MANAGEMENT


prepared and submitted by Kathleen B. Bataller and Reina D. Layson, is hereby

recommended for Oral Examination.

MA. DARIA N. LABALAN, CPA, MBA Chairperson

ENGRACIO M. LUCINADA, CPA, MBA NICETAS F. MARILAG, CPA, MBAMember Member

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RESULT OF FINAL ORAL EXAMINATION

Candidates : KATHLEEN B. BATALLER

REINA D. LAYSON

Title : RECEIVABLE MANAGEMENT PRACTICES OF SELECTED CABLE

TV SERVICE PROVIDERS IN LEGAZPI CITY

Date : APRIL 17, 2013

Time : 1:30 – 2:30 PM

PANEL OF EXAMINERS ACTION

MA. DARIA N. LABALAN, CPA, MBA ___________________Chairperson

ENGRACIO M. LUCINADA, CPA, MBA ___________________Member

NICETAS F. MARILAG, CPA, MBA ___________________Member

TRESSA ADELFA M. MORTOLA, CPA, MPAThesis Adviser

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APPROVAL SHEET

Upon the recommendation of the Final-Oral Defense Committee, this

undergraduate thesis entitled “Receivable Management Practices of Selected Cable

TV Service Providers in Legazpi City” prepared by:

Kathleen B. Bataller

Reina D. Layson

is hereby approved in partial fulfillment of the requirement for the degree of

Bachelor of Science in Accountancy.

ENGRACIO M. LUCINADA, CPA, MBAClass Adviser

TERESITA Ll. NACION, Ed.D.Dean of College of Business Education

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ACKNOWLEDGEMENT

The researchers would like to extend their sincere and deep gratitude to the

following persons who assisted and supported them in making this thesis possible.

Rev. Fr. Crispin C. Cordero, SVD, President of Divine Word College of Legazpi,

for being an instrument for academic growth gained in the completion of the study in

DWCL.

Teresita Ll. Nacion, Ed.D., Dean of the College of Business Education, for her

continuous motivation and inspiration that greatly helped the researchers to develop the

study.

Tressa Adelfa M. Mortola, CPA, MPA, the thesis adviser, for providing them

guidance, ideas and suggestions for the further improvement of the study.

The thesis committee, Ma. Daria N. Labalan, CPA, MBA, Nicetas F. Marilag,

CPA, MBA, for their constructive suggestion and critique of the study.

Engracio M. Luciñada, CPA, MBA, for his patience and encouragement which

enabled the researchers to pursue its completion.

The Respondents: DCTV Cable Network and ESTV Cable Television

Network, for their time, trust and utmost cooperation in answering the survey

questionnaire.

The Parents of the researchers, for the invaluable support, unconditional love

and understanding which served as inspiration to finish the study.

The Friends of the researchers, for always being there to give them

encouragement and support throughout the completion of this study.

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And, to all not mentioned who in one way or another have contributed something

that made this study possible.

Above all, to Almighty God for giving the researchers His countless blessings,

gift of life, wisdom, knowledge, inspiration, strength and determination to go through the

study.

K.B.B & R.D.L

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ABSTRACT

Kathleen B. Bataller “RECEIVABLE MANAGEMENTReina D. Layson PRACTICES OF SELECTED

CABLE TV SERVICE PROVIDERS IN

LEGAZPI CITY” (An Undergraduate Thesis Presented to the College

of Business Education, Divine Word College of Legazpi, Legazpi City, March 2013)

Cable TV service providing is one the businesses where receivables serve as the

main stream of transactions they are engaged other than the operations. This type of

business would show us how they handle the complexities in managing receivables.

The management of receivables of cable TV service providers is done by

continuous evaluation and improvement of the internal control integrated in the billing

and collections of the company. Receivable management is the formulation and

administration of plans and policies of an account and ensuring the maintenance of

receivables at a predetermined level and their collectability as planned.

This study determined the receivable management practices of selected cable

TV service providers in Legazpi City. Specifically, the study sought to answer the

following:

1. What is the profile of the selected cable TV service providers in terms:

a. Form of ownership

b. Years of operation

c. Number of subscribers

d. Annual gross revenue

e. Annual operating expense?

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2. What are the receivable management practices of the selected Cable TV Service

Providers in Legazpi City in terms of:

a. Billing

b. Collection

3. What are the problems encountered by the Selected Cable TV Providers in

Legazpi City along the above-cited variables?

4. What are the measures adopted by the Selected Cable TV Providers in Legazpi

City to address the problems encountered?

The research theory of the study is the Reporting-driven Downward Spiral Theory

of John G. Salek. It is a dicusses the phenomenon that starts when receivables are

below expectations.

The respondents of the study are the DCTV Cable Network and ESTV Cable

Television Network. The study made use of a descriptive method of research. The

responses to the survey questionnaire were analyzed and interpreted using weighted

mean.

Findings

After a careful analysis of the data gathered, the following are the findings of the

study.

1. With the gathered data about profile of the respondents, cable TV service

providers in Legazpi City are operated by corporation. One of the cable TV service

providers is operating their business in more than 17 years in the industry while the

other operates for 20 years. They cater service in the entire Albay province and other

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neighboring provinces which gave 3,350 and 1,421 subscribers for the two

respondents.

Having annual gross revenue of Php 7,425,045 and Php 14,035,996.56 with

matching annual operating expense of Php 6,983,101 and Php 13,302,726.72

respectively shows that cable TV providers are profitable.

2. In terms of billing, the respondents bill their customers monthly. Bills are then

reconciled with official list of subscribers. They notify their clients through personal

delivery. The cable TV providers sometimes allow their customers to have more than

one unpaid bills. Credit balances are also reviewed monthly. They sometimes allow

writing off of bad debts. In a month, they write off minimum of 1 to 3 accounts and a

maximum of 7 accounts.

The respondents use accounts receivable in transactions with the subscribers.

They collect payments through collectors or over-the-counter and usually receives

cash and checks as payments. Prepayments are sometimes practiced in the

company. When a notice of notification for disconnection is received, the customers

are always allowed 1 to 15 days. The delivery of bills to customers and the collection

of payment are done by one person and issues official receipt upon payment.

3. Despite the practices implemented in managing receivables, problems are not

avoided. The cable TV service providers, in terms of billing sometimes encounter

misstatements of amounts and human errors/typographical errors. They sometimes

do not bill some customers because of mistakes. Lost documents and delay of

handling bills to customers are also encountered at times. Having not updated

records are never encountered by the management. This implies that errors are not

detected and corrected at times. This will further lead to problems encountered in

collections.

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Late payments are always encountered by the cable TV service providers. This

implies that the respondents do not implement enough strictness in collecting from

their subscribers. Low collection due to fortuitous events is sometimes encountered.

Counterfeit payments are sometimes received by the respondents. They never

encounter lost payments, clients that do not have good credit standing and

inadequate collection procedures.

4. Several measures are adopted by cable TV service providers in Legazpi City to

address the problems mentioned. In terms of billing, double checking the bills before

giving to customers is done. The employees also undergo training. Individual

receivable records are posted only from authorized source documents to certify the

genuineness of the records.

Customer database and usage records are accurately maintained. This is done

for them to easily access the records and detect any errors. Credit policy of the

company is also continuously evaluated and improved to minimize credit risk

Other measures in managing receivables in terms of collections include service

disconnection. Service disconnection is one of the options to collect the amounts due

as rapidly as possible. Policies and procedures are also clearly stated and

systematically communicated to customers. The cable TV service providers

implement strict collection policy to allow the company to recover receivable amounts

from customers. The cable TV service providers adopt neither offering promos that

encourage early payment nor charging interests and penalties on delinquent

accounts. They do not also ensure the genuineness of the payment received thru

bank deposit.

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Conclusions

Based from the foregoing findings, the study revealed the following conclusions:

1. The selected cable TV service providers in Legazpi City are operated by

corporation. The business proved that it can last for long period of operation. The

number of subscribers is not also the basis to gain more income but on the proper

way of collecting receivables to generate revenue and incurring expenses.

2. The receivable management practices of cable TV service providers shows that

the relationship between the service providers to the customers are systematic for

they give consideration to the customers without sacrificing their financial affairs.

They allot time for the steps in preparing the bills to be definite in every record

and avoid mistakes as possible. The cable TV service providers give importance to

their customers by collecting the payments in which clients are convenient. Their

collection practices of the respondents favor the customers because additional costs

are not charge even if they have overdue accounts. Giving them enough or even

more time in paying their bills is one of the effective collection practices the

customers are offered.

3. The respondents seldom encounter problems regarding billing although errors

are not sometimes detected. These are unintentionally done and cannot be

prevented because they are caused by circumstances that cannot be controlled.

The most common problem encountered by the cable TV service providers is the

late payments of the customers. It sometimes happens in the company because they

are not strict in the collection processes. They do not apply a more suitable and

effective policies to avoid and minimize their problems regarding collections. They

cannot easily detect those who are not honest payers.

4. Given the problems encountered in managing receivables, the respondents

adopted measures to address these. The receivable records are treated properly

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with the use of authorized source documents and customer database to ensure safe

keeping. The organization of bills is also given attention to easily monitor the billing

system of the cable TV service providers. The respondents also continuously

evaluate and improve the credit policy to minimize errors regarding billings.

The cable TV service providers only charge fixed amount for they do not offer

promos or discounts to encourage early payment or charge interests that

respectively increase and decrease the amount due. As a consequence to

customers for not paying, service disconnection is the measure being adopted by the

cable TV service providers to discontinue rendering service.

Recommendations

From the findings and conclusions made, the following are presented by the

researchers by way of recommendation.

1. The cable TV service providers should set an exact date of the delivery of

bills.

2. They should also set precise number of bills to limit the number of

outstanding balances that they may encounter.

3. They must keep back up records of their bills to have another copy in case

the documents are lost.

4. Misstatement or errors must also be minimized by having careful inspection

of the records.

5. Cable TV service providers should allow accepting payment through bank

deposits to make it more convenient for the customers to pay their bills.

6. The receipt of counterfeit payments may also be addressed by having their

collectors undergo seminars that could help them distinguish this type of

payment.

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7. They may also implement one month deposit to the subscribers to avoid

future losses.

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Table of Contents

Content Page

Title Page i

Editor’s Certification ii

Result of Oral Examination iii

Recommendation for Oral Examination iv

Approval Sheet v

Acknowledgement vi

Abstract viii

Table of Contents xv

List of Tables xviii

List of Figures xix

CHAPTER

I THE PROBLEM AND ITS SETTING

Introduction 1

Statement of the Problem 3

Scope and Delimitation 4

Significance of the Study 4

Notes

6

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II REVIEW OF THE RELATED LITERARTURE

Related Literature and Studies 7

Synthesis of the-State-of-the-Art 22

Gap Bridged by the Study 24

Theoretical Framework 25

Conceptual Framework 27

Definition of Terms 27

Notes 30

III RESEARCH METHODOLOGY

Research Method 32

Sources of Data 32

Respondent of the Study 33

Research Instrument 33

Data Gathering Process 34

Statistical Treatment 34

Notes 36

IV RECEIVABLE MANAGEMENT PRACTICES OF SELECTED CABLE TV

SERVICE PROVIDERS IN LEGAZPI CITY

Profile of the Respondents 37

Receivable Management Practices

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Billing 38

Collections 40

Problems Encountered in Managing Receivables 42

Measures Adopted to Address Problems Encountered 45

V SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

Summary 48

Findings 49

Conclusions 52

Recommendations 53

Areas for further Study 54

REFERENCES

Books 56

Unpublished Materials 56

Internet Sources 56

APPENDICES

Appendix A Survey Questionnaire to the Accounting Department 59

Appendix B Letter to Department of Trade and Industry 64

Appendix C Letter To The Respondents 66

CURRICULUM VITAE

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List of Tables

Table Title Page

1 Receivable Management Practices in terms of Billing 39

2 Receivable Management Practices in terms of Collections 41

3 Problems Encountered in terms of Billing 43

4 Problems Encountered in terms of Collections 44

5 Measures Adopted to Address the Problems Encountered in

Billing 45

6 Measures Adopted to Address the Problems Encountered in

Collections 46

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List of Figures

Figure Title Page

1 Theoretical Paradigm 26

2 Conceptual Paradigm 28

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