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” This junk AR comes in a variety of forms, such as: Short payment/deductions Debit memos Unapplied credit memos Unapplied cash Late payment fees and other surcharges Early payment discounts taken but not deserved Clutter obscures the true amount a customer owes and causes confusion.
How much baddebt does the company have, and how has this changed over time? Are we offering the right amount of credit to customers based on their creditworthiness? Consider these additional KPIs: Baddebt ratio: This measures the monetary value of receivables you believe you cannot collect.
In contrast, profit driven enterprises often miss opportunities because they are too restrictive out of a fear of baddebt losses. A segmentation analysis will help you refine your credit policy guidelines and thereby improve the efficacy of your credit decisions.
It also helps provide documentation in the event that your company has baddebt that it is able to take as a tax deduction. Disputes and deductions. Credit management and monitoring. Send onlinecreditapplications to both existing customers and potential prospects.
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