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Completion or Default of Accounts Receivable
Learn what to do when your customer cannot pay their balancePreview the first lesson free — get full access to all 6 lessons.
Intermediate Provider : Laura Onufrock 6 Lessons · 18m in Arabic, German, English, Spanish, French, Portuguese, Chinese
Course Description
In this course, you will learn how an AR system can potentially increase your company’s working capital. An increased working capital could help your company invest and grow. An AR system will only help your working capital if it is properly managed. This course will help your company ensure that customers are paying their past due balances so that you can collect. However, defaults will occur, and your company will want to be prepared to manage uncollectible customer accounts.
Companies that make the decision to establish an accounts receivable system have clear processes and procedures for collecting past due balances and uncollectible customer accounts. This course will introduce you to some of these procedures, including the AR aging report to evaluate customer accounts as they age. You will also learn about potential options your company has when a customer defaults. You may choose to factor the account, turn to a third party for AR management, or determine the impairment of the account and write off the bad debt. This course will help you understand these options and their uses. Like all loans, the accounts receivable process is heavily regulated. Any form of loan can be a risk for the lender for many reasons, including the risk of default on the loan. This course will also cover regulations and other processes that minimize risk for the company, like the creation of clear and straightforward contracts with the customer.
What You'll Learn
- Explain how an accounts receivable system can increase a company's working capital
- Understand the AR aging process and use the AR aging report to evaluate accounts as they age
- Identify best practices for collecting past due balances
- Manage uncollectible accounts through options such as factoring, third-party AR management, or writing off bad debt
- Learn about accounts receivable regulations and processes that minimize risk for the company
Key Takeaways
- A properly managed accounts receivable system can increase working capital, helping a company invest and grow.
- The AR aging report is used to evaluate customer accounts as they age and to manage collection of past due balances.
- When a customer defaults, options include factoring the account, turning to a third party for AR management, or determining impairment and writing off the bad debt.
- Because the accounts receivable process is a form of lending, it is heavily regulated and carries risk of default for the company.
- Clear and straightforward contracts with customers help minimize risk for the company.
Frequently Asked Questions
What will I learn in this course?
You will learn how an AR system can increase working capital, the AR aging process, best practices for collections, options when a customer defaults (factoring, third-party AR management, or writing off bad debt), and accounts receivable regulations and risk-minimizing processes.
How does an accounts receivable system help working capital?
An AR system can potentially increase your company's working capital, but only if it is properly managed by ensuring customers pay their past due balances so you can collect.
What options does the course cover when a customer defaults?
The course covers options including factoring the account, turning to a third party for AR management, or determining the impairment of the account and writing off the bad debt.
What topics are covered in the lessons?
Lessons include Introduction; Cross-functional Cooperation; Accounts Receivable Reporting and Account Aging; Defaults and Termination of Delivery; Research, Legal Concerns, and Escalation; and a Test Your Knowledge assessment.
