Accounts Receivable
Part 2 of a 4 part series
Warning Signs:
- Receivables exceed 50 days outstanding.
- Days receivables outstanding increases significantly.
- Significant decrease in sales/receivables.
Steps to Improve: EXTENDING CREDIT
- Tighten up credit practices.
- Investigate new credit customers adequately.
- Check references before extending credit to a new customer.
- Establish credit limits; then, enforce them.
- Write sales contracts to permit recovery of collection fees.
- Write sales contracts/credit agreements to permit charging interest.
- Consider credit insurance.