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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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7–13. Compile Customer Assets Database

If a collections person finds that a customer will not pay, the usual recourse is to reduce or eliminate the customer’s credit limit and to use threats—dunning letters and phone calls. These instruments are frequently not sufficient to force a customer to pay. However, what a collections person does not always realize is that there may be some other customer assets on the premises that the company can refuse to ship back to the customer until payment is made. When these assets are grouped into a database of customer assets, the collections staff has a much better chance of collecting on accounts receivable.

A customer assets database lists several items the customer owns, but which are located on the company premises. One common customer asset is consigned inventory. This is stock the customer has sent to the company either for resale or for inclusion in a finished product the company is making for the customer. Another customer asset is an engineering drawing or related set of product specifications. Yet another is a mold, which the customer has paid for and which a company uses in the plastics industry to create a product for the customer. All of these are valuable customer assets, which a company can hold hostage until all accounts receivable are paid.

The best way to keep this customer assets information in one place is to store it in the inventory database, because it is already set up in most accounting systems and includes location ...

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