1.

Credit Approval
 Credit Application: Prospective customers complete a credit application.
 Credit Check: Perform credit checks and evaluate the financial health of the
customer.
 Credit Limit and Terms: Set credit limits and payment terms based on the
evaluation.
2. Invoice Generation
 Sales Order: Ensure that sales orders are complete and accurate.
 Delivery Confirmation: Verify that goods/services have been delivered or
provided.
 Invoice Creation: Generate invoices based on the sales order and delivery
confirmation.
 Invoice Details: Include all necessary details such as invoice number, date, due
date, payment terms, and a breakdown of charges.
3. Sending Invoices
 Delivery Method: Send invoices via email, mail, or through an electronic
invoicing system.
 Confirmation: Confirm receipt of the invoice with the customer.
4. Payment Processing
 Payment Receipt: Record payments received from customers, ensuring they are
matched to the correct invoice.
 Payment Methods: Accept various payment methods (e.g., checks, bank
transfers, credit card payments).
5. Reconciliation
 Bank Reconciliation: Regularly reconcile bank statements with AR records to
ensure all payments are accounted for.
 Invoice Reconciliation: Reconcile customer accounts to ensure all invoices and
payments are accurately recorded.
6. Collections
 Monitoring: Regularly monitor aging reports to track overdue accounts.
 Reminders: Send payment reminders to customers as the due date approaches
or if an invoice is overdue.
 Follow-Up: Contact customers via phone, email, or mail for overdue payments.
 Negotiation: Negotiate payment plans or settlements with customers facing
financial difficulties.
7. Dispute Resolution
 Dispute Identification: Identify and document any disputes or discrepancies
raised by customers.
 Resolution Process: Investigate and resolve disputes in a timely manner,
adjusting invoices if necessary.
 Communication: Keep the customer informed throughout the dispute resolution
process.
8. Reporting and Analysis
 Aging Reports: Generate aging reports to analyze outstanding receivables and
identify high-risk accounts.
 Performance Metrics: Track key performance indicators (KPIs) such as Days Sales
Outstanding (DSO), collection efficiency, and bad debt ratio.
 Regular Reviews: Conduct regular reviews of AR performance and implement
improvements as needed.
9. Write-Offs
 Assessment: Periodically assess accounts that are unlikely to be collected.
 Approval: Obtain approval from management to write off uncollectible accounts.
 Adjustment: Adjust the AR records to reflect the write-off, ensuring compliance
with accounting standards.
10. Documentation and Compliance
 Record Keeping: Maintain detailed records of all invoices, payments,
communications, and adjustments.
 Compliance: Ensure compliance with relevant regulations and accounting
standards