Consulting Services:

Credit and Collection Policies

Accounts receivable are a major element in working capital for most companies. Managing accounts receivable is a critical element of the

overall cash flow management function and one that can be very costly

and time-consuming.

The management of accounts receivable can be broken down in terms of its two major components: the credit granting process and the collection process. Credit policies can be summarized with a two-part question: To whom should credit be given and how much? Collection policies are to ensure the money owed is collected. Some accounts receivable will be paid on time, some after the date due, and others will never be paid at all. While these variables are not completely within the company’s control, they can be controlled to some extent through the company’s collection policy.

While most companies have these policies, some do not. And whether or not they exist at a company, an increase in business can put tremendous pressure on those departments that are responsible for granting credit and collecting money when due or overdue.

Sisterson can help your company by offering the following solutions:

• We will recommend credit policy upgrades, or set initial policies, following the historical “five Cs of credit”: character, capacity, conditions, capital, and collateral
• Determine the right collection policy for your company and standardize it through written procedures
• Research potential technology solutions
• Streamline communications between the credit, accounting and finance functions
• Recommend new procedures that can improve departmental productivity
• Qualify senior level credit professionals and/or make other staffing recommendations
• Act as temporary credit department managers directing the implementation of new credit and collection policies and procedures and other projects
• Recommend financing strategies using accounts receivable as collateral