Formulation of collection policy, Financial Management

Assignment Help:

Q. Formulation of Collection Policy ?

Formulation of Collection Policy:- The third characteristic of the receivable management is to formulate a collection policy. Collection policy is required for the reason that all the customers do not pay in time. Some customers pay subsequent to the due date and some do not pay at all. If collection is belated additional funds are needed during the period in-between to pay for wages, purchase etc. Delay in collection as well increases risk of bad-debts. Collection policy lays down the collection process followed to collect the amounts from the customers who don't pay within credit period allowed to them. Subsequent to the expiry of credit period the firm must initiate collection procedures to make collection from debtors. The efforts must be polite in the beginning however with the passage of time they should be made strict. The efforts more often than not made by the firm include:

(i) Reminder Letters

(ii) Telephone Calls

(iii)Personal Visits

(iv) Engaging collection agencies.

(v) Settlement at extended payment period.

(vi) Legal Action.


Related Discussions:- Formulation of collection policy

What is emerging issues task force, Q. What is Emerging Issues Task Force? ...

Q. What is Emerging Issues Task Force? Emerging Issues Task Force (EITF) - Assists FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and provides guidance on early identification of

Explain the competitive benchmarking, Explain the Competitive Benchmarking ...

Explain the Competitive Benchmarking Healthcare services or Hospital are compared to rival 'competition 'in the same industry for instance methods of patient care and levels o

Determine the change in profit, (a) The BEQ is 200 customers per month, i.e...

(a) The BEQ is 200 customers per month, i.e. $3,000 / ($20 - $5) (b) The margin of safety is 300 customers, i.e. 500 - 200 (c) Graph (d) New break-even is 334 customers, i

Cases let, How would you judge the potential profit of Bajaj Electronics on...

How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit.

Analysis of company position, Analysis of Company Position Associated ...

Analysis of Company Position Associated International Supplies Ltd Circulation: Associated International Supplies Ltd (AIS Ltd.) Author: A. Consultant, AXY Consultin

List a few types of non-price rationing systems, List a few types of non-pr...

List a few types of non-price rationing systems. (a) Queuing. (b) Favored customers. (c) Rationing coupons.

Problem in the determine of cost of the capital, Q. Problem in the determin...

Q. Problem in the determine of cost of the capital? Conceptual controversies regarding the relationship between the cost of the capital and the capital structure: different the

Determine the value of most common cash flow pattern stock, Name two patter...

Name two patterns of cash flows for a share of common stock. How does the market determine the value of the most common cash flow pattern for common stock? Cash flows for a sha

Mr, discuss the applicability of financial management in respect to poultry...

discuss the applicability of financial management in respect to poultry farming in uganda

What are the time dimensions of the income statement, What are the time dim...

What are the time dimensions of the income statement, the balance sheet, and the statement of cash flows?  Hint: Are they videos or still pictures?  Explain. The income stateme

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd