Billing and Credit Policy

Section One: Establishing Credit Policies  

• What is the purpose of credit?
• Outline of a credit policy:
• Mission
• Department objectives
• Roles and responsibilities
• Procedures
• Measuring results
• Building a Credit Policy from the first principles
• Identifying roles and responsibilities: introducing a control framework
• Using Process Mapping to identify potential areas of conflict  

Section Two: Credit Risk Assessment: Establishing the Criteria and Authority Levels

• Credit risk assessment: establishing the criteria and authority levels
• Establishing credit worthiness: intent and ability to pay
• Analysing financial statements to determine company health
• Other sources of credit information
• Establishing Credit Limits
• Offsetting credit risk: guarantees, bonds and insurance options
• Key data required for the Customer Master File
• Credit worthiness as a basis for debtor classification   

Section Three: Billing Process Best Practices  

• Getting it right first time: Billing process defined
• Authorisation levels, audit and control checks
• Billing frequency and reconciliations
• Accounting for VAT
• Using technology to leverage the billing process
• Benefits of an integrated Billing / Accounts Receivable solution
• Third-Party solutions, including Electronic Data Interchange (EDI)  

Section Four: Managing the Collection Process  

• Defining effective collection strategies based upon debtor value, risk and behaviour
• Reviewing strategy effectiveness and establishing triggers for review
• Automating the collection process: Leveraging workflow management tools
• Engaging with “internal customers”​ to manage debtor performance
• Aged analysis the debtor ledger using Microsoft Excel®
• Defining strategies to manage – and resolve – customer disputes
• Authorisation of escalation measures: litigation or insolvency  

Section Five:  Monitoring Credit Performance  

• Reviewing debtor performance
• Tracking credit worthiness and updating risk ratings
• Analysing debtor risk by category using Microsoft Excel®
• Collectability
• Process effectiveness
• Debt "at risk"
• Provisions for “Bad”​ and "Uncollectable" debt
• Action Plan: Review existing Credit Policies or Create a Fresh Set of Policies