Credit & Collections Policy

Receivables Training Academy

Credit and Collections Policy
Part – 1 of Series

What is a C&C Policy? The C&C policy sets forth who, what, where, when and how a organizations receivables will be handled.

All businesses that extend credit, or who provide goods and services to persons or another organization should have a clearly defined C&C policy.  

It is common practice for businesses to offer the following forms of business credit: Delayed Payment, Financing, Charge Card, Checking Services and now Factoring.  The new player on the block is the Receivables Exchange.  The Receivables Exchange pares your receivables with a person or a business to purchase your receivables for pennies on the dollar.   It says right on their website:

The Receivables Exchange is a “revolutionary” financing tool that helps businesses boost cash flow when they need to, on their terms. The Exchange can help your business:

• Make payroll or pay bills
• Manage extended payments from customers
• Build a strategic cash cushion

First of all this is not revolutionary.  Debt Purchasing, payroll and cash cushions have been around for decades.  In the collections industry we consider this platform debt purchasing.  Now the cons to their program are your business must meet the following criteria:

1. A minimum of $2 million in annual sales
2. At least two years of operational history
3. Registered to do business in the U.S.

Here Is the Bottom Line

Delinquencies will continue to be a problem if internal factors such as, lack of a good information system, passive collection of repayments by untrained staff, poor methodologies and policies are not addressed.  To deal with delinquency the business should have a clear system for analyzing, controlling, and managing delinquency and a clear policy for reporting late receivables as part of the overall financial health of the business.  In our next newsletter we will address the analysis of the cause and effects of delinquency.