Author: Author FAO

Processes – AR – Collections – Query handling – workflow

We listed high level steps for query handling, both in case of voice based and non-voice based processes. http://faoblog.com/processes-ar-collections-query-handling-3/ Each process will have some client specific steps. What would be more appropriate to share here? A workflow, what else. (click on image for a larger view) Subscription and Guest Post: You may subscribe to the blog from the subscription box on the opening page of the blog. We have enabled a button on the top of the first page, which will enable you share your posts. If you wish to write about any of the current streams, you can...

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Processes – AR – Collections – Query handling

You saw other activities which could generate queries. http://faoblog.com/processes-ar-collections-query-handling-2/ Now, for any query process, the process workflow will be very similar. First, it would depend on the mode of receipt of a query, which could be: E-Mail Phone call Snail mail Front end / sales team Accounting groups / internal communications Workflow application Ideally, breaking this up into two, voice and non-voice types would be the best mechanism to handle queries. Process steps For a voice based setup, automated voice call routing networks will route a call to the CCEs or the customer care executives, who will handle initial...

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Processes – AR – Collections – Query handling

We discussed how queries get generated by a customer account reconciliation process. http://faoblog.com/processes-ar-collections-query-handling/ But under AR or accounts receivables related processes, there can be other forms of queries as well. Product queries – You may receive queries from prospective / existing customers of your clients about the key products of your client, their prices, specifications etc. Queries on invoices raised – lots of queries are generated for various invoices raised on the invoice, the articles invoices and the terms of invoice by an end customer of your client. Things like price differences, tax components, ordered verses dispatched quantity differences,...

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Processes – AR – Collections – Query handling

We shared the process steps for a customer accounts reconciliation process of collections. http://faoblog.com/processes-ar-collections-customer-account-reconciliations-3/ There are two more activities here, which often are ancillary to customer accounts reconciliation Query handling Dispute resolution These activities can also work as independent activities, with some of their input triggers coming from the customer account reconciliation process. Let us pick up the first activity, Query Handling. As a part of a large business, your client’s customers will have queries for sure. As of now, since we were discussing customer account reconciliations, let us see how queries will come out of those activities. We...

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Processes – AR – Collections – Customer Account Reconciliations

We started a discussion on customer account reconciliations: http://faoblog.com/processes-ar-collections-customer-account-reconciliations/   Why do we need reconciliations? There could be a hoard of reasons for the same. Sales returns – your client’s customer might have returned some sales due to reasons like delayed delivery, defective material, damage in transit, delivery to incorrect location etc. The intimation for this may not have been sent, or the sales return department may be waiting for the customer’s return advise, or the advice may not have been accounted for, or the return material may be in transit / not yet received. Early / prompt payment...

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Processes – AR – Collections – Customer Account Reconciliations

Did you get your free report on analytics? http://faoblog.com/embedded-analytics-enable-collaboration/ In the post before that we had covered analytics as a focused activity for collections. http://faoblog.com/processes-ar-collections-focused-activities-analytics/ There is a beautiful outsourcing candidate in collections, Customer  Account Reconciliations. If you talk to an accounting student about reconciliations, he will tell you that it is an activity of comparing the same set of transaction activity recorded by two different sources and identify, map and close the differences, so that both recording sources reflect identical transactions and balances.   Customer  Account Reconciliations Customer Account reconciliations is an important, critical and an ongoing activity....

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Processes – AR – Collections – Focused activities – analytics

We shared the on-site follow up process in the last post: http://faoblog.com/processes-ar-collections-on-site-follow/ There is an interesting stream, tracking collections and building a strong analytics around collections. This is actually a very interesting field, and often a high end activity. We had talked earlier on ageing analysis and DSO computations. Large organizations go much beyond this. Though at times this starts at the approval stage of customers, but becomes an ongoing activity, since the status of various customers might change. This involved adding high end analytics as focused activities.  Some key activities may include: Analysis of the market standing of...

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Processes – AR – Collections – On-site Follow up

We shared reader’s feedback with you in the last post. http://faoblog.com/processes-ar-collections-workflow-2/ One more process that we had talked about was: Actual collections through on-site agents Normally this is an onsite activity, based on the geography where the client’s customers are placed. Usually, an off-shore unit will not handle this directly, but be supportive by providing MIS and specific details to a collector. Sometimes a near-shore or on-shore back office handles this. Some activities would comprise of: Visiting the customer to deliver letters Visiting customers for collection of payment / payment advise / payment proofs Sometimes this may involve collection...

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Processes – AR – Collections – Workflow

We had a few great interactions on the credit limit models with our readers. http://faoblog.com/processes-ar-collections-follow-credit-limit-feedback/ http://faoblog.com/processes-ar-collections-follow-credit-limit/  Processes – AR – Collections – Workflow  Let’s stop beating about the bush. Something which a lot of readers have been waiting for, a workflow for a collection process (Click on image for a larger view).   —————————————————————————— Subscription and Guest Post: You may subscribe to the blog from the subscription box on the opening page of the blog. We have enabled a button on the top of the first page, which will enable you share your posts. If you wish to write...

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Processes – AR – Collections – Follow up

We shared a sample 2nd and 3rd reminder letter for a collections follow up process. http://faoblog.com/processes-ar-collections-follow-6/ Here are samples how a fourth and final reminder may look like and the note thereafter to your client’s legal department / attorney to initiate legal action. Forth Reminder: Customer Name, Address Dear Sirs, We very much regret that the sum of $.XXXXXX  has been overdue since long and in spite of our repeated requests and reminders you haven’t remitted the amount or even responded to our letters / not honored you promises to remit and clear the amount. If we do not...

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Processes – AR – Collections – Follow up

We shared a free report from the Aberdeen Group on how to reduce Cash-to-Cash cycle. http://faoblog.com/b2b-collaboration-reduce-cash-to-cash-cycle/ Based on the previous post on collections follow up, in the last post on this topic, I had shared a softer letter for a delinquent reminder to clear dues. http://faoblog.com/processes-ar-collections-follow-5/ Based on your client’s requirements, you will slowly need to go strict on your collection letters. You could have three to five levels or as may be defined by your client. Some samples are given below for your reference. ———————————————————————- Second Reminder – Collections – Follow up : Customer Name Address Dear Sirs, We...

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Processes – AR – Collections – Follow up

Another 30 day overdue sample letter for collection follow up: We shared a sample collections letter for 30 days overdue. http://faoblog.com/processes-ar-collections-follow-4/ Reader’s feedback: A reader Prince Jaiswal from Linkedin group Finance & Accounts (F&A) Professionals remarked: “Good One bt the letter immediately conveys the message of penalty/legal actions… I think, this should be the last step, otherwise it destroys future business relations….. other hand, it is also true that if large dues are there in books, there is no question of doing future business…. however, still good relations can do wonders. Thank you Prince for your feedback. He is...

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Processes – AR – Collections – Follow up

Last post we covered various modes of a follow up for collections processes. http://faoblog.com/processes-ar-collections-follow-3/ A sample collection reminder letter:   Let me share a sample collection letter draft with you. ———————————————————————- To Firm Name, Address Dear Sirs, Sub: Payment due reminder We would like to remind you that a sum of Rs. …………… has become overdue by nearly 30 days. This amount was for your purchases of  XX units of ABC product, which were invoiced to you vide instrument number ABC-XXXXX, dated MM-DD-YYYY.  This was received by your warehouse on MM-DD-YYYY vide material receipt no. DEF-XXXXX. You are requested...

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Processes – AR – Collections – Follow up

Follow up activities for a collections process Last post we shared how a pre-delinquency could improve collections for your client http://faoblog.com/processes-ar-collections-follow-2/ Delinquency collections follow up Coming back to the main stream, where the amount has fallen due and your team has been assigned to do the requisite follow ups. Your ageing analysis will really come in handy here. http://faoblog.com/processes-ar-collections-ageing-analysis/ Though we have mentioned earlier, the three key ways of follow up are: Follow up through email / snail mail Follow up through calls Actual collections through on-site agents Every client thinks and assesses its customers differently. As the collector,...

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Processes – AR – Collections – Follow up

Follow up activities for a collections process We started on follow up activities and covered pre-delinquency level follow up http://faoblog.com/processes-ar-collections-follow/ Continuing on this, let me share a trend with you. In most of the situations, where I have managed a collection process, I have seen that most of the clients, especially if they are mid-sized, do not really care for setting up a pre-delinquency level follow up. The collection departments start chipping in only after the amount has become overdue. Of late, utility and large companies have started deploying this practice and they follow up on amounts before the...

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Processes – AR – Collections – Follow up

Follow up activities for a collections process: Did you download the free AP report on automation? http://faoblog.com/free-ap-report-invoice-data-capture-key-ap-automation/ Delinquency: Our last post on this covered setting up critical follow up levels for a collections process. http://faoblog.com/processes-ar-collections-delinquency-4/ Like I said, this is an activity that the client will do, what we as outsourcers / back office folks end up doing is the actual follow up activities: Follow up through email / snail mail Follow up through calls At the pre-defined levels, we need to start the follow up activities needed to ensure collections. As listed above, the first set of activities...

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Processes – AR – Collections – Delinquency

While talking about delinquency, we got an interesting insight from one of our readers, which we shared last time http://faoblog.com/processes-ar-collections-delinquency-3/   Setting up critical follow up levels for a collections process Once we have defined and setup the norms which cover what delinquency in a collections process is, the next step is to define the critical follow up levels. Now, as the term suggests, critical is a key word. But before we reach there, we need to set up follow up levels. A standard structure for any client will consist of a soft follow up just before an amount...

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Processes – AR – Collections – Delinquency

More on delinquency levels in a collections process of Accounts Receivable – discussion on a reader’s feedback Last post we shared some factors instrumental in defining delinquency levels: http://faoblog.com/processes-ar-collections-delinquency-2/ One of our readers Ad Wijten remarked: Reader’s comment: “To my mind the approach of receivables is taken from the wrong angle. The decision to grant a credit-term is purely a financing decision. Companies are in the business to deliver products and services and not to finance the supply chain. This is where banks (should) have a role. We need to re-enforce the supply chain by optimizing the funding at...

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Processes – AR – Collections – Delinquency

We started on delinquency levels in the last post. http://faoblog.com/processes-ar-collections-delinquency/ Let us try to understand what really defines a delinquency level. As articulated in the last post, delinquency is an amount which is overdue. To understand how your client may define the delinquency levels, we need to understand his business dynamics, his business model, competition, industry practices etc. So if I have to bullet these, definition of delinquency levels will require a good understanding of: Defining the date when an amount will fall due We will need to understand what credit periods does the market offer What are the...

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