The excessive receivables of the enterprises: causes and consequences for the financial system of Ukraine

Abstract

In accordance with the established approach, excessive receivables are a manifestation of the crisis situation with inter-company settlements whose fundamental reason is the lack of liquidity and capital in the economy. Freezing cash into receivables slows down capital flows in the economy, generates systemic risks and negatively affects the companies' investment activities. In this article, excessive receivables are defined as the excess of the share of receivables in assets over its normal level, which is typical for a particular country's model of business financing, with due regard to sector specificity. The author analyzes causes and consequences of the abnormally high amounts of recei¬vables in Ukraine. Among the reasons for excessive receivables in the assets of Ukrainian companies are low payment discipline and difficulties in recovering debts, whose manifestations include a large proportion of overdue and bad debts. The emphasis is made on slowing settlements and increasing burden of receivables in the country. Decomposition of aggregated receivables for goods, works and services based on company size shows a shift in the non-payment burden towards small and medium-sized businesses, whose manifestation is the extension of repayment terms. At the same time, more than a half of the receivables in Ukraine's companies accounts for other receivables that are not directly related to the companies' operative activities, which is one of the manifestations of business financialization. Compared to foreign countries, the above share in Ukraine is abnormally high, due to the active use of shadow loan capital schemes by companies, including the laundering of "dirty" funds and the injection of capital from offshore to support business liquidity. Solving the problem of excessive receivables requires overcoming the existing liquidity shortage in Ukraine, increasing money supply based on gradual reduction of this government debt dependence and restoring business confidence in the banking system of Ukraine. The publication is prepared for the implementation of the planned project of the Department of Finances of the Reals Sector in the Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine: "Financial Risks of Doing Business in Ukraine: Sector of Nonfinancial Corporations" (state registration No 0118U006088).

The Concept of Receivables and Some Issues of Its Regulation

“…Дубровська Є. В. [4,7], Закревської О.Ю. [5], Мазаракі А.А., Малюги Н.М., Садовської І.В., Сурніної К.С., Таратути Л.В.…”

“…Іванілов О. С. вважає, що дебіторська заборгованість -складова оборотного капіталу, яка передбачає певні вимоги до фізичних та юридичних осіб з оплати товарів, продукції, робіт [7] -це відкритий кредит.…”