RISK-BASED APPROACH TO ACCOUNTS RECEIVABLE MANAGEMENT: INTEGRATING COUNTERPARTY CREDIT SCORING AND DISCIPLINE MONITORING

Abstract

The contemporary landscape of financial architecture and reporting necessitates a fundamental shift toward a preemptive, risk-centric methodology. This strategy prioritises the forecasting of potential defaults by business partners significantly ahead of maturity dates. At the heart of this concept lies the synthesis of two pivotal instruments: multifactorial credit scoring for preliminary verification of a buyer's creditworthiness during the contracting phase and perpetual tracking of their payment behaviour throughout the entire business relationship. Such a combined framework empowers organisations to adaptively calibrate credit parameters – including exposure caps, payment windows, and incentive structures – tailored to the specific risk profile of each debtor, thereby harmonising the trade-off between credit exposure and projected margins. Beyond internal governance, the urgency of this research is amplified by international regulatory mandates, specifically International Financial Reporting Standard 9 (IFRS 9) regarding financial instruments. This directive obligates entities to implement a forward-looking expected credit loss (ECL) framework, necessitating a persistent, anticipatory evaluation of credit threats instead of merely recording historical impairments. Consequently, a risk-oriented model coupled with prognostic analytics evolves from a managerial preference into a cornerstone of financial statement integrity. The objective of this inquiry is to conceptually validate and architect practical guidelines for deploying a robust risk-based system for managing trade debts by merging advanced scoring engines with real-time payment discipline surveillance, while ensuring full alignment with IFRS 9 protocols. To fulfill this aim, the following research objectives were pursued: to examine the conceptual evolution of risk-centric governance over corporate financial assets; to evaluate scoring methodologies and identify critical financial and qualitative metrics for verifying counterparty reliability amidst economic volatility; to design a diagnostic framework and 'early warning' protocols for tracking payment performance; to construct a unified model linking scoring data with monitoring outputs for dynamic credit limit adjustment; to define the accounting treatment of risk-driven debt management results under the ECL paradigm of IFRS 9; and to provide actionable blueprints for embedding this risk-based engine into the operational cycles of domestic firms.