Last version published: 15/09/2020 08:17
Publication number: ELQ-56635-2
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Credit Control & Debt Recovery Procedures
A Word Document outlining Best Practices for Credit Control & Debt Recovery.
1.1 Debt Collection is the execution of functions necessary to collect unpaid income for the company, owed by customers who are debtors.
1.2 Credit Control is the limiting of further services and sale of products to debtors in arrears and the negotiation for payment in exchange for normalizing further product supply and service delivery.
1.3 Due date means the date indicated on an account statement by which time payment of the amount on the statement is required.
2. THE PURPOSE OF THE GUIDE
In order to sustain the Company’s excellent product and continued service delivery, the collection of Sales revenues on account statements submitted to debtors (current accounts) must be realized within a turnover rate not exceeding 30 days unless other wise stated. Payment of arrears must also be addressed sufficiently for the main categories of debtors in order to minimize arrear debtors.
This guide serves to clearly document the key elements of Credit Control and Debt recovery to be implemented within your company and interventions to be implemented for non-compliance with the guide
To increase the sales, the company may grant credit facilities to its customers. These customers become debtors, as they owe money to the company. As long as there are debtors, a need arises to control their accounts as some debtors may, by nature, have an unwilling tendency to pay their debts and other debtors may become insolvent or bankrupt, etc
The Credit Control function is divided into Payment Demands, Cut-offs and possible Legal functions. The “Cut-offs” functions include services and product supply restrictions and follow-up on non-responses.
The Debt Collection function includes the issuing of reminder letters, payment arrangements, telephone collections, field visits and inactive accounts with the related arrears written off. The Legal functions deal with Attorneys and inactive accounts
This is a highly versatile, very sophisticated financial model template, and is also user-friendly.
If you have any inquiries, modification request or other requests of assistance to customize the model template for your business case please contact us here: https://www.eloquens.com/channel/ecorporatefinance
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