Reporting and AnalyzingReceivables
Keeping Receivables Healthy
For any large company, managing receivables carefully is crucial to profitability. As Maria Cardosoknows, keeping tabs on the timely receipt of payments from hundreds of credit accounts can be a tough job.Ms. Cardoso is supervisor of credit and collections at Mississauga-based Wyeth Consumer Healthcare, aCanadian subsidiary of global pharmaceutical company Wyeth. Wyeth distributes top-selling, name-brand, over-the-counter health-care products.The company's sales terms are 1/15, n/30 (1% discount if paid within 15 days). Sometimes, if thecustomer pays several invoices—some under 15 days, some over—with one cheque, Ms. Cardoso mightallow the discount for all of them. That's because smaller companies often write cheques only once aweek, or even once a month. “We always consider each case individually,” she says.The process starts with a decision to grant a customer an account in the first place. A sales rep gives thecustomer a credit application, which Ms. Cardoso reviews. In addition to checking three goodreferences, she screens prospective accounts with a credit agency. Once accepted, they are assigned acredit limit based on their size and history.They are then supervised closely. “We get an aging report every morning that shows exactly what eachcustomer owes and what category the account falls into—current, 1–30 days, 31–60 days, 61–90, andover 90,” says Ms. Cardoso. “Fortunately, our receivables are always at 95% current or better.” When anaccount is overdue, there's usually an explanation. Ms. Cardoso tends to call as soon as a payment islate. “If the invoice has gone missing, for example, you want to find out right away,” she says.
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