Accounting Best Practices, Fifth Edition

18–4. Collection Policies for Best Practices (Chapter 7)

• The collections staff has primary responsibility for receivable collection, but may call on the assistance of the originating salesperson if normal collection techniques prove ineffective. This policy clearly states who has primary and secondary responsibility for collections.

  Impacted best practices:

  • Clearly define account ownership

• Senior management shall collectively review and adjust the corporation’s product and services pricing policy at least annually. This policy gives the collections manager periodic input into price formulation by informing senior management of the impact of the existing pricing structure on billing and collection problems.

  Impacted best practices:

  • Simplify pricing structure

• The collections staff can write off individual invoice balances of up to $___, not to exceed $___ in total per customer during a ___ month period, with no additional approval. This policy avoids an excessive degree of management approval for small-balance write-offs, while still providing control over multiple write-offs involving the same customer.

  Impacted best practices:

  • Write off small balances with no approval

• The credit manager must approve all credit requests exceeding $____ prior to issuance of a final, firm sales quote. This policy forces the sales staff to first collect credit information from prospective customers before presenting a final quote. The dollar floor included in the policy allows management to restrict this policy ...