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When we first think about creditrisk, our minds focus on the financial status of the company in question. To manage the risk that a customer might default, companies implement credit and collection policies and procedures.
Your Virtual Credit Manager is a reader-supported publication. Do you need help assessing your customers’ creditrisks? The experts at Your Virtual Credit Manager have default risk probabilities and other financial benchmarks for analyzing your AR portfolio and revealing actionable insights.
Subscribe now The Problem with AR Clutter In a perfect world, your AR Ledger would contain only whole, current invoices; or at least nothing seriously pastdue. Invoice balances that remain unpaid 60 or 90 or more days beyond their due date are not providing any benefits. Be decisive and action-oriented.
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? Lack of transparency and visibility into customer interactions can hinder performance.
Share How to Clean Up Your AR Ledger Launch a collection program to collect all pastdueinvoices at least 15 days late. Clear from your AR ledger as many of the clutter transactions as possible. Match as many unapplied payments and unapplied credit memos to open invoices, deductions, and debit memos as possible.
Creditrisk management also plays a huge role in the O2C process—a loose credit policy is likely to be accompanied by lagging customer payments and an increased risk of bad debts, while tighter credit controls can result in profit opportunities being missed.
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