Accounting Best Practices, Fifth Edition

7–20. Implement Customer Order Exception Tracking System

Many of the problems that result in collections work begin much earlier, from the time an order is entered into the system to the time it is produced, shipped, and invoiced. This interval is not one that the collections staff has any direct control over (unless the collections manager happens to run the entire company!), which means that problems upstream from the collections department will nonetheless have a direct and continuing impact on the quantity and type of problems that the collections staff must handle.

A good best practice for rooting out problems before they become collection issues is to set up a reporting system to track exceptions for customer orders as they move through all of a company’s various processes. By keeping close tabs on these reports, the manager of the collection function can tell when there will probably be collection difficulties. By determining problems with specific customer orders in advance, the collections manager can work with the managers of other departments (mostly by suggestion) to correct problems before orders are shipped. A crucial factor in the success of this best practice is the interpersonal skill of the collections manager, who must bring customer order exceptions to the attention of other managers in such a way that they will not reactive negatively, but rather work with the presented information to make prompt corrections to their systems.

Another use of the reports is to ...