1. Credit Controls and Accounts
Receivable Management
“Any fool can lend , but it takes a lot of skill to get it back”

2. Introduction
Please give:
• Your name
• Your job & Company name
• Your commercial experience
• What specific expectations do you have?

3. Learning Objectives
• The objectives of credit and accounts receivable
management
• How credit and account receivable management fit into
corporate finance and treasury operations
• How companies develop credit policies
• How companies calculate the costs and benefits of credit
policies
• The forms of credit extension

4. Learning Objectives Cont…
• The commonly used terms of sale, including credit terms
• How companies make customer credit decisions
• How companies measure and monitor accounts
receivable
• How companies finance accounts receivable
• How the cash application process works
• Auditing the Receivables Cycle.

5. Learning Objectives Cont…
• Learn how to calculate the following:
• Annualized cost of trade credit
• Days’ sales outstanding (DSO)
• An aging schedule

6. Receivables Cycle
 What are receivables?
•Receivables are sales made on credit basis.
Why do we need receivables?
Cash Receivables
Operating
Understanding Receivables Cycle
•As a part of the operating cycle
•Time lag b/w sales and Inventory
receivables creates need for working capital

7. The Customer to Cash Process
Customer
Credit Risk Collections Credit Debit
Management Management Adjustments
PO to Shipment
Payment Forecasting &
to invoice
Processing Reporting
Reconciliation
Deductions &
Cash
Billing &
Dispute
Invoicing
Management

8. Credit Policy and Collections
Order Order Sale Cash
Placed Received Received
Accounts Collection
< Inventory > < Receivable > < Float >
Time ==>
Accounts Disbursement
< Payable > < Float >
Invoice Payment Cash
Received Sent Paid

9. Credit Terms or Payment Terms
• It is the length of time a buyer has to repay the amount
of debt owed on an obligation. This includes:
1- The maximum time allowed for repayment.
2- Discount for cash or early payment
3- And the amount or rate of late payment penalty

10. Collection Methods
• Centralized / Decentralized collection system
• Post – dated check
• Pay Orders / Bank drafts
• Bills of Exchange
• Lock – box System
• Drop – box System
• Factoring
• Collection staff/ agents
• Debt collector
• Del Credere agent
• Concentration banking

11. Audit Program for Receivables and Revenue
Substantive Procedures
Substantive Tests Audit Objectives
Obtain aged listing of receivables Clerical accuracy
and reconcile to G/L
Obtain analyses of N/R and
related interest
Inspect notes on hand and Existence, occurrence, and rights
confirm those not on hand
Confirm receivables with debtors Existence, occurrence, and rights
Valuation

12. Flowchart of the Confirmation Process
A
Develop Audit Objectives
Prepare and Mail the Requests
Choose Appropriate Confirmation Form
Send 2nd requests for positive
confirmations
Determine the timing
and extent Perform alternative procedures
For non-respondents
Identify the information to be
confirmed Resolve exceptions
Document the procedures and
Select the accounts for confirmation results
A

13. Thank You For Coming Today!
Facilitator: Antoine Tabbakh
Tel: +961 1 385 825 / website: www.bsf-lb.com
Email: info@bsf-lb.com
/BestSolutionFinance Company/bsf #bsfbeirut