Tag Archives: subledger
Guidelines your collection staff should follow when dealing with debtors – part 1
Reach an agreement with the debtor on the amount owed. One of the key things the collections person can do is help the debtor overcome his or her internal resistance. With the exception of a disputed amount, most debtors know they must pay and, more often than not, most want to pay. Getting them to [...]
Maximizing Your Collections Efforts – part 1
The first thing to realize is probably the most important rule of bad debt collection: the collection effort begins before the sale is made. If you wait until a debt goes bad and the debtor goes south, the likelihood of collection is low. But if the sales person takes time to qualify the account, check [...]
A Guide to Tracking Receivables: The three indicators – part 2
Receivables tracking reports provide a system to determine which customers need to be reminded to pay, a process called dunning. It’s tough to nag customers for payment, but it may be necessary. The first approach is generally by letters—polite at first, then threatening if polite doesn’t work. These efforts are usually automated. The letters may [...]
A Guide to Tracking Receivables: The three indicators – part 1
The three indicators based on balance—balance in excess of the credit limit, longest-running balance, and highest balance—represent elective risk based on sales decisions the company has made regarding specific customers. If the risk grows too great, a change in policy and procedure may be in order. The credit manager may be too lax in his [...]
A Guide to Tracking Receivables: Reports maximizing the company’s financial potential – part 2
Receivables aging. This sort of report has two basic purposes. First, it allows managers to understand how old the receivables are; the older a receivable, the less likely it will be collected. Second, the report helps accountants calculate the amount of money to allow for uncollectible accounts. Customer balance tracking. In preserving the asset value [...]
How to Handle Bad-Debt Write-Offs: the early stages – part 2
When a receivable—such as back rent from Creative Lens Photography in the example used earlier—fails to materialize, you reduce your reserve for bad debts and ACCOUNTS RECEIVABLE, thus lowering both accounts. The transaction looks like this: Debit reserve for bad debts $4,000 Credit accounts receivable $4,000 Note “Write-off of Creative Lens back rent” The landlord [...]
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Recent Posts
- Credit informational asymmetries
- Adverse selection in a loan model
- Conditional credit expectation rule
- A credit discriminatory pricing rule
- Types of bank capital represent its own credit risk class
- Different degrees of loans subordination
- General fluctuations of credit spreads
- Investors require a premium for taking on credit risk
- Lagging indicators of credit quality
- Selection of your credit spread class
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