For
most companies, receivables are the outcome
of
doing business resulting in payment from a satisfied customer for the product
or service delivered. However, companies lacking a clear strategy for managing
accounts receivable are losing money without knowing it through poor tracking,
a weak or nonexistent dispute resolution process, and technology that impedes
efficiency rather than supports it. Finance staff may struggle to keep money
flowing in while satisfying competing management objectives to minimize bad
debt loss and maximize sales.
What
are the financial and other benefits that result from a wellarticulated
accounts receivable management strategy? What are the penalties of a poor
strategy or the lack of any strategy at all?
Credit Control
Planning :
1:- Must
Ensure All Sales Person Familiar & Agreed With Your Credit Company
Policy.
2:- Prepare
Online / Offline Credit Application Form.
3:- Make
a credit check on each new customer. This can be a simple as downloading
recent accounts from the Companies Registration Office
4:- Take
a personal guarantee from doubtful customers.
5:- Set
/ Check a minimum order level for credit sale. this is important for
remember that there is a cost involve in setting up a credit account
6:- Prepare
a sheet & authorized by top Management which customers will
receive credit ; credit is not an part for automatic entitlement.
7:- Define
if you have need credit conservation.
8:- Set
a credit limit for each new customer.
9:- Arrange
to regular credit checks for your customers.
10:- Use
fully documented Terms.
11:- Must
Ensure Terms of Trade include a Retention of Title Clause.
12:- Must
Ensure your Terms of Trade allow you to charge interest on Late Payment
13:- Must
Ensure your Terms of Trade have procedures to deal with disputes.
14:- Must
Ensure your Terms of Trade specify Credit Terms. Best terms are 30 days
from date of invoice – not 30 days from end of month; But In this Indian Market
Some companies give 45 To 90 Days Terms its depend at your company policy if
they agreed with this terms.
15:-
Any Types of Payment Terms must prepare in writing with both party on stamp
paper.
16:- Provide
every customer for an unique account / Customer Number.
17:- Confirm
the following details:
• Identify
the company you are trading with.
• Name
of person within the company to contact over payment.
• Contact
address.
• Phone/Fax/Mobile
numbers/e-mail addresses.
• Company
VAT number.
• Company
PAN number.
• Company
registration number (if a limited company:-.
18:- Setup
record the date when payments due.
19:- Find
the ways when your customer pay their bills.
20:- Specify
the most apply payment method through cheque/RTGS/ NEFT/credit.
Invoicing
21:- Always
Check Your Prepared Invoices if Any Error Found Rectify the Same before send.
22:- Include
the following on all invoices:
- Your
bank details.
- Terms
and conditions of sale.
- Name
of the organisation you are trading with.
- Address
for payment.
- Order
number.
- Order
description.
- Delivery
date.
- Unit
price.
- VAT
number, amount and rate.
- Total
amount due.
- Due
date for payment.
- Payment
terms.
- Discounts
given.
23:- Prepared
invoices within 24 hours of delivery of the goods or services &
collection of POD.
24:- Check
that your delivery is in line with the order to avoid invoice disputes.
25:- Confirm
receipt of invoice for large accounts.
26:- Issue
monthly Statements of account showing invoices paid and still outstanding.
Collection
27:- Divide
your customers into Good, Average and Bad, and set a Collection Policy for each
category.
28:- Properly
allocate payments against specific unpaid invoices.
29:- Phone
major accounts before the due date of payment to ensure there are no disputes
and that the way is clear for payment to be made on time.
30:- Chase
overdue payments within a week of them being due.
31:- Conduct
an aged debt analysis each week.
32:- Priorities
your collection activity and chase the highest values first.
33:- Levy
a charge for “bounced cheques/direct debits”.
34:- Use
a set policy for further chasing, for example, standard letters, calls, faxes,
visits referring to Solicitors or a Debt Collection Agency.
Recovery
35:- Consider
stop supplying when payment has not been made by a set time past the due
date. Have a different stop policy for different categories of customers.
36:- Put
the matter in the hands of a Solicitor or Debt Collection Agency.
37:- Pursue
the claim through the Courts.
Management
38:- Have
documented procedures including timescales for handling and resolving disputes.
39:- Establish
a system for measuring the success of your credit control
function. Establish “tight but attainable” targets. Best measurement
is Days Sales Outstanding.
40:- Have
a regular monthly review to identify problem accounts and define courses of
action.
41:- Have
regular meetings with your sales team.
42:- Ensure
your staff are well trained : trained to prepare, listen, question,
persuade and negotiate.
Posted By : Rohit Kumar
