We talked about various scenarios where in a collections / general segment, how customer support becomes critical and can be leveraged as a back office / outsourced process.
Important thing to note is that though a lot of back office / outsourced units use this for collections sub-components, this goes much beyond that and often forms an independent process altogether.
When we are talking of AR or accounts receivable processes, one crucial aspect is to determine and define the credit limits of various customers. The activity for this is called “Credit Management”
This process can comprise of the following activities:
- Researching a customer’s market standing
- Understanding his overall business requirements
- Reaching out to various related banks to understand the financial standing of the customer
- Reviewing reports of ratings agencies on the market standing of the customer
- Drafting of credit terms
- Negotiation and agreement on credit terms
- Contract execution
- Execution of various guarantees, bank or other, including letters of credit and other surety instruments
- Execution, recording, follow up and realization of bills of exchange as may be required
- Escrow handling, especially for very large value contracts
- Review of the customer’s payment patterns, including defaults if any and the reasons thereof
- On-going research and trend analysis on all of the above
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