By John G. Salek
International enterprise, performed on a credits or cash-on-delivery foundation, frequently produces debts receivable which are a good portion of a corporation's tangible resources, but a lot of those self same firms be aware of bills receivable in basic terms in a trouble. advisor Salek helps dealing with debts receivable as one could a portfolio and handling the dept as energetic in profitability, with suggestion at the techniques that result in receivables, in receivables asset administration, in picking out and utilizing know-how to help receivables, and in organizational constitution, reporting and metrics, acquisitions, and outsourcing. He even comprises luck tales.
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Additional info for Accounts Receivable Management: Best Practices
Computation to trigger a hold should include: • Open receivables • Pending orders • Customized inventory that cannot be easily resold Note: The exposure to affiliated customers who are part of the same corporate entity must also be tabulated by the system. This is often called “parent/child” linkage. It enables you to monitor total exposure to a corporate entity. Without this parent/child linkage and tabulation, a company’s exposure to a customer with many divisions and subsidiaries will be invisible and uncontrolled.
Dollars, an exchange rate change may make it expensive or difficult for a customer to obtain dollars and pay you. • Political risk. S. dollars out of the country. • Difficulty in enforcing your claims in the local legal system. Many credit information services provide credit reporting and country risk information to enable credit decisions. The quality and reliability vary, and do not eliminate risk. The best credit information you can get is with an existing customer, for whom you have payment experience, and may be able to obtain audited financial statements.
While it may not be prudent to grant the full level of credit desired by the customer (and your sales department), some combination of credit and security can usually be found to enable the deal. Building a Specific Reserve for High-Risk Customers Another Best Practice to enable credit sales is special provisioning of the reserve for bad debt for individual high-risk customers. If management still wants to sell on credit beyond the limits the credit investigation indicates is prudent, an innovative technique is to provision the 26 Accounts Receivable Management Best Practices bad debt reserve for a specific customer (or category of customer) at higher rates until the reserve is adequate to cover the risk of the exposure of that customer.