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    Credit and Collections: The Real World
    Credit and Collections: The Real World
    Credit and Collections: The Real World
    Ebook71 pages1 hour

    Credit and Collections: The Real World

    By John Kovalchek

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    About this ebook

    This book speaks to the basic problems that small and medium businesses encounter when the company begins to grow and their customers begin asking for a littletime to pay for their purchases and their cash is slow coming;thusbegins the credit department or at least Accounts Receivable.
    LanguageEnglish
    PublisherAuthorHouse
    Release dateOct 22, 2012
    ISBN9781477282182
    Credit and Collections: The Real World
    Author

    John Kovalchek

    He received his B.S. Degree in accounting from King's Colleege and a M.B.A. In business administration from the University of Scranton. Both schools are located in northeastern Pennsylvania. He began his career as Credit and Collections Supervisor in the publishing industry. Continuing his career moves, he took a position as Director of Credit and Collections in a manufacturing and sales company.Later in his career, he became Controller for a small chemical manufacturer where he was later promoted to Assistant Treasurer and Controller when the company was acquired. He later performed consulting jobs for various businesses after retirement.

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      Book preview

      Credit and Collections - John Kovalchek

      © 2012 by John Kovalchek. All rights reserved.

      No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

      Published by AuthorHouse 10/17/2012

      ISBN: 978-1-4772-8219-9 (sc)

      ISBN: 978-1-4772-8218-2 (e)

      Library of Congress Control Number: 2012919597

      Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

      Certain stock imagery © Thinkstock.

      Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

      Contents

      I INTRODUCTION

      II THE CREDIT FUNCTION

      A. CREDIT POLICIES AND PROCEDURES

      B. SETTING CREDIT GOALS

      III TERMS OF SALE

      A. Cash Discount vs. Trade Discount

      B. Selling Terms

      C. Non-Open Account Terms

      IV DEVELOPING CREDIT GUIDELINES

      A. Initiating & Maintaining the Credit File

      B. Setting Credit Lines

      V CUSTOMER MASTER FILE

      VI REQUIREMENTS TO CONVERT TO COMPUTERIZED

      ACCOUNTS RECEIVABLE CREDIT SYSTEMS

      A. Functional Requirements

      B. Required Data

      C. Processing Requirements

      VII TOOLS TO IMPROVE COLLECTIONS

      A. Credit Files

      B. Past Due Report

      C. Credit Status Report

      VIII FORECASTING COLLECTIONS

      I

      INTRODUCTION

      Each year numerous articles are written with regard to the credit function and its place in the corporate structure. If there is any agreement at all among the educators and practitioners, it is that no one set course of education or career path has yet been established for individuals who wish to pursue a career in credit administration.

      One credit manager says that, once in credit management, he can’t imagine performing without motivation to obtain accounting knowledge while another manager believes being an accountant is a detriment to being a good credit manager. Accounting deals in numbers; credit managers deal with people.

      A vice president of a large corporation says that he would rather convert a sharp sales person into a credit manager than try to convert a sharp accountant. Yet, another feels that while a broad background is an asset; financial training is a necessity.

      A general consensus is that the credit manager in any organization is a recognized generalist. The credit manager must maximize profitable sales and keep losses to a minimum. Credit management must know accounting, manufacturing, marketing and public relations as well as being well-versed in general business conditions and company objectives in order to assess the risk in daily decisions.

      A curriculum at this time in credit administration is not offered toward a degree. Most clerks, managers and credit executives now applying their skills to the trade have learned from trial and error or, at best, from the many informative articles and seminars provided by the profession.

      This book is intended to be used as a guide for the small and medium size companies who do not presently have a formal credit and collection program. It is also for those who have implemented an informal program but now have a need to place re-emphasis on the most important phase of their business.

      With the economy in its rapidly fluctuating peaks and valleys and tight money supplies management must be made aware of the serious need to review their credit administration. The information contained herein should assist all management in reviewing their current credit functions and responsibilities in order to effect required changes.

      II

      THE CREDIT FUNCTION

      As a practical matter, the credit function is created for

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