Accounts Receivable and Credit Policies Management

Program Overview:

A sizable share of a company’s working capital is tied up in Accounts Receivable (AR) and this poses a high liquidity risk. In this course, participants will acquire more knowledge and expertise in AR. This will enable participants and your organizations to manage their accounts receivable effectively without compromising credit and sales.

For Whom:

This program is designed for Accounts receivable department managers, credit managers, AR staff, AR and revenue accountants, credit officers, billing and collection clerks, AR specialists, and professionals in accounting, finance, operations and sales who interact with the accounts receivable and credit department.

Learning Objectives:

At the end of the program, participants will be able to:

• develop effective credit policies that meet a company’s objectives;
• use billing best practices techniques;
• employ effective collection policies;
• partner with the sales force for the benefit of the company;
• evaluate the accounts receivable process and implement best practices; and
• apply tools and techniques to effectively monitor AR performance.

Course Outline:

Day 1

• Credit policies management
• Credit department responsibility
• Factors affecting credit policies
• The five Cs of credit
• Non-financial factors affecting credit decision
• Outline of a credit policy
• Credit department mission
• Credit department objectives
• Roles and responsibilities
• Procedures
• Measuring results
• Review new accounts
• Re-evaluate existing accounts
• Financial statements: what to look for
• Analyzing selected financial ratios
• Setting the credit limit
• Establishing a profitable relationship with the customer
• Meeting the needs of the customer

Day 2: The billing process

• An efficient billing process means faster collection
• Preventing the fatal mistake: sending the bill with errors
• The use of technology
• Impact of up-front operations on billing
• Best practices in billing
• You made the sale, now collect your money
• Cash: it is worth your efforts
• Tips, techniques and guidelines for faster collection

Day 3: Importance of setting a collection policy

• Using different collection approaches
• Strategies in dispute management
• Best practices in collection
• Accounts receivable factoring, pledging and assignment
• The relationship between sales and credit
• Breaking the ice
• Maintaining credit sales relationship
• Role of sales in issuing credit and in collection

Day 4: Accounts receivable process analysis

• Improving the quality of accounts receivable
• Aging of accounts receivable and bad-debts reserves
• Alternatives in computing bad-debt
• Reducing bad-debt write-offs
• Calculating accounts receivable turnover
• Calculating Days of Sales Outstanding (DSO)
• Calculating Best Possible Days Sales Outstanding (BPDSO)
• Collection Effectiveness Index (CEI)
• Analyzing the operating and cash cycles
• Managing AR through portfolio strategy
• Analyzing the size, composition and complexity of the

AR portfolio

• Segmenting the portfolio
• Formulating an approach for specific segments

Day 5: Staying in control

• Internal controls in AR processes
• AR and the monthly closing of accounts
• Outsourcing of accounts receivable functions

Training Methodology

Lectures, discussions, exercises, and case studies will be used to reinforce these teaching/learning methods.