Your credit policies and business practices could be the culprit to rising receivables.
As is the case with many businesses nationwide, accounts receivable have increased, negatively impacting the bottom line.
Thoughtful analysis, methodical, and periodic review of the receivables will offer tremendous insight to necessary changes in credit terms.
Every receivable should be reviewed to see where the “process” broke down:
- set up of the account
- extension of credit
- sale
- delivery
- billing and/or collection
Receivables should then be segregated by commonalities to expose and then to correct the weak links. Factors to consider are:
- age of the receivable
- size of the receivable
- customer characteristics
- underlying transaction creating the receivable
By analyzing the data, effective changes in the business work flow process can be made, which can improve your bottom line.
