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

Price of the share as per gordon''s model, Considering the following inform...

Considering the following information, what is the price of the share as per Gordon's Model?  Details of the Company

#fintitle..515, Hi can someone help me with my assignment also understand i...

Hi can someone help me with my assignment also understand it in order for me to do the voice thread and answer all questions that might confront me.

Sources of Finance, A regional division of a water company is upgrading its...

A regional division of a water company is upgrading its water filtration & purification plant; the new system is expected to last 20 years & to cost $40m. The parent company has ha

The standard contribution rate and actuarial liability, Question 1: Giv...

Question 1: Give the formulae for the Standard Contribution Rate (SCR) and Actuarial Liability (AL) for each of the following funding methods: a) Credit Unit Method b)

Life insurance - property and causality insurance, What are the differences...

What are the differences between life insurance and property and causality insurance? Life insurance prevents against death, retirement and illness. Companies obtain premiums b

What are implications of ownership rights by equity claims, What are the ma...

What are the main implications of ownership rights by equity claims? Ownership rights have two primary implications: a. First, equity holders can advantage by any raise in t

Why is the replacement value of assets method, Why is the replacement value...

Why is the replacement value of assets method not generally used to value complete businesses? The replacement value of assets method isn't often applied to entire business val

Municipal bonds, 1. Tax-backed debt and 2. Revenue bonds ...

1. Tax-backed debt and 2. Revenue bonds are two types of municipal bonds.

Find out eps, The financial manager of A ltd.co. expects that its EBIT in t...

The financial manager of A ltd.co. expects that its EBIT in the current year is 10,000. The firm has 5% Deb. Amounting to Rs. 40,000., while 10% Pref. Share amounts to Rs. 20,000.

Current scenario of hedge fund industry, Global Scenario The Hedge Fund...

Global Scenario The Hedge Fund industry has captured over US $ 2 trillion in assets globally by the end of year 2006. According to an investor survey revealed for the Hedge Fun

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