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Accounts Receivables Portfolio Strategy: The Modern Approach To AR Management

For B2B companies, accounts receivable continues to be among the top three tangible assets on the balance sheet. Despite this, accounts receivable as an asset is often under- managed, leading to significant cash being unnecessarily locked within your financials. The undermanagement or at times mismanagement of this critical asset not only hinders cash flow but can also strain overall business operations and growth potential.

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Accounts Receivables Portfolio Strategy: The Modern Approach To AR Management

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  1. Collection Follow-up Matrix Invoice Date Due Date Due Date +30 Due Date +60 ObjectivePercentNumber of of A/R Accounts A. Cash Flow 60% 170 (>$10k) B. Cash Flow & 30% 430 Bad Debt ($5k-10k) Avoidance C. Bad Debt 10% 900 Avoidance (<$5k) Automated Payment Reminders and Dunning Notices I Present Invoices- Email, Portal or Physical I I Proactive Call I I --- Periodic Calling --- I I Periodic Meetings I Escalate I Present Invoices- Email I I Proactive Call On Large Invoices I |--- Collection Calls ---| Escalate I ------ Automated Payment Remiders with Link to Pay ------ I I ------- Collection Calls ---------- I Escalate Credit Hold Invoice Date Due Date Due Date +30 Due Date +60

  2. Unbilled V/s Billed Unbilled Billed

  3. Aging Analysis

  4. Size of Invoices ObjectivePercentNumber of of A/R Invoices A. Cash Flow 60% (>$10K) 170 B. Cash Flow & 30% ($5k-10k) 430 Bad Debt Avoidance C. Bad Debt 10% (<$5k) 900 Avoidance

  5. Financial Status Customer Name Credit Balance Not Due Over Due Partial Paid Total Customer 1 (-$34000) $56000 $65900 $78100 $166000 Customer 2 (-$12000) $34500 $44300 $12000 $78000 Customer 3 (-$28000) $12200 $90000 $22000 $96200 Customer 4 (-$230000) $1813400 $220000 $7300 $1810700 Customer 5 (-$254000) $230000 $30200 $235000 $241200

  6. Non Financial Status

  7. Concentration Risk

  8. Segmentation By Business Unit Total 181-1 Year Business Unit Outstanding Not Due 0-30 31-60 61-90 91-120 121-180 1 -2 year 2 -3 year >3year Business Unit 1 $954000 $56000 $65900 $78100 $166000 $56000 $166000 $56000 $65900 $78100 $166000 Business Unit 2 $450100 $34500 $44300 $12000 $78000 $34500 $78000 $34500 $44300 $12000 $78000 Business Unit 3 $549200 $12200 $90000 $22000 $96200 $12200 $96200 $12200 $90000 $22000 $96200 Business Unit 4 $117200 $18400 $22000 $7300 $18100 $7300 $8300 $7300 $2300 $7500 $18700 Business Unit 5 $416000 $2300 $30200 $23500 $24100 $230000 $24200 $2300 $30200 $25000 $24200

  9. AR By Product Total 181-1 year Product Outstanding Not Due 0-30 31-60 61-90 91-120 121-180 1 -2 year 2 -3 year > 3year Product 1 $954000 $56000 $65900 $78100 $166000 $56000 $166000 $56000 $65900 $78100 $166000 Product 2 $450100 $34500 $44300 $12000 $78000 $34500 $78000 $34500 $44300 $12000 $78000 Product 3 $549200 $12200 $90000 $22000 $96200 $12200 $96200 $12200 $90000 $22000 $96200 Product 4 $117200 $18400 $22000 $7300 $18100 $7300 $8300 $7300 $2300 $7500 $18700 Product 5 $416000 $2300 $30200 $23500 $24100 $230000 $24200 $2300 $30200 $25000 $24200

  10. AR By Region or Territory Total 181-1 year Region Not Due 0-30 31-60 61-90 91-120 121-180 1 -2 year 2 -3 year >3year Outstanding Region 1 $954000 $56000 $65900 $78100 $166000 $56000 $166000 $56000 $65900 $78100 $166000 Region 2 $450100 $34500 $44300 $12000 $78000 $34500 $78000 $34500 $44300 $12000 $78000 Region 3 $549200 $12200 $90000 $22000 $96200 $12200 $96200 $12200 $90000 $22000 $96200 Region 4 $117200 $18400 $22000 $7300 $18100 $7300 $8300 $7300 $2300 $7500 $18700 Region 5 $416000 $2300 $30200 $23500 $24100 $230000 $24200 $2300 $30200 $25000 $24200

  11. AR By Collector

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