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Collectors spend most of their time asking for payments While it is true collectors are constantly requesting payment of pastdue balances, once that request is made they end up spending most of their time resolving disputes and invoice discrepancies. For more on collection efficiency, check out this article.
(Photo by Aziz Acharki on Unsplash ) Because Credit Policy is a part of Sales Policy, how you manage credit impacts company profits. How then does your Credit Policy affect your overall profitability? It affects the level of baddebt loss (uncollected Accounts Receivables) you suffer. The policy cost is acceptable.
Who absorbs any potential baddebt loss — does the lender have recourse to return the AR if they cannot collect it versus a non-recourse arrangement? Who performs the Credit & Collection activities — you or the finance company? Your Virtual Credit Manager is a reader-supported publication.
Share How to Clean Up Your AR Ledger Launch a collection program to collect all pastdueinvoices at least 15 days late. Match as many unapplied payments and unapplied credit memos to open invoices, deductions, and debit memos as possible. For more on the importance of periodic credit reviews, click here.
Supporting profitable sales through the extension of credit Collecting as much of the AR generated as possible by or near the due date to ensure a substantial cash inflow Mitigating the risk of baddebt losses These tasks are best accomplished in a tidy environment.
To continue reading and learn how to recognize O2C shortcomings along with seven critical factors for AR success you must be a paid subscriber to Your Virtual Credit Manager. Do you need help assessing your customers’ creditrisks? Delaying collection activities can lead to reduced cash flow and baddebt losses.
When collection efforts are not timely, prioritized, and comprehensive, customer payments lag and increase the probability baddebts will occur. If the expectation is to ship orders within 24 hours or less of receipt, your process for making sure the order is within credit approval parameters (e.g.,
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