GENTRY-DE LA GARZA MODEL

Analyzing account receivables using the model created by college professors James A. Gentry and Jesus M. De La Garza in mid-1980s. The model offers three reasons the accounts receivable balances may rise: sales pattern effects, collection experience effects, and joint effect. The model allows firms to escalate the cash inflows speed and to cut down the cash outflows speed. These are partially a function of increasing sales (sales pattern effect), deterioration in collections (collection experience effects), and certain combination of both (joint effect).