To operate the credit and collection operations in the company is required to implement an operating system of methods and procedures within the organizational structure of the company. This operation should have the majority interest of those who run the organization and above all, responsible for managing Credit and Charges as credit management and recovery has been upgraded to a professional and ethical responsibilities to their own, giving an image of modernization, importance and high performance within the company.
9.1. ORGANIZATIONAL UNIT OPERATING
From organizational point of view of the credit process prior to the collection, but all the operations of these functions are complementary and interlinked by a comprehensive process that allows them together to a single function, hence born homogeneous operations that must be a single unit operation. (Principle category).
For this reason the combination of both activities in a single task force is recommended to handle them, ie directing credit and collections under the responsibility of one person and organizational structure already defined from the start of activities.
Considering the inherent risk factor is given credit for companies that have decided to implement a credit system as an alternative to increasing sales, but the recovery is performed by another specialist firm, a move that is interpreted as demand greater accountability of who develops this role, but in any case the supplementary charge is still made even if the other organization other than the company.
Depending on the importance of the activity, responsible for implementing the credit and collections functions, occupies a key position in the firm, which is increasing the responsibility of both to help increase sales and to allow recovery of capital through a cash payment.
9.2. DESIGN OF THE STRUCTURAL ACTION OF THE DEPT. Credit & Collection
Regardless of the size of the organizational structure of the company is the wholesaler, retailer, distributor representative, the first things you will ever make the person or persons responsible, will be to implement a work plan identifying the following General: Set
But every function that complements an organization must have goals coming from the purpose or nature by which to materialize the objectives.
9.3. OBJECTIVES FOR THE CREATION OF THE RECEIVABLES AND COLLECTIONS OPERATE
The priority objectives must necessarily be based on the Material Resources Human and conditions available to the company if you implement a system of credits and collections.
As far as possible be taken into account:
This structure will allow management bodies have an efficient and accurate timely reporting.
We must not forget that for the collection to fulfill its purpose, the communication must be timely so that the information reaches the decision means when this is required.
is also necessary to note that when you restructure a credit bureau and collection should be emphasized that this structure varies from one company to another, from one business type to another, although there are certain core functions that are common to all.
therefore should not make the mistake of design department literally the structuring of credit and similar charges by another company, even if this could mean lower costs and apparently work a minimum.
9.4. LOCATION OF THE ROLE OF RECEIVABLES AND COLLECTIONS IN THE CORPORATE STRUCTURE
This depends on the interest to put the entrepreneur or executive officer to execute this function.
Regardless of this, we can say that its location within the organizational structure may be linear or support. It can also refer that this decision will depend on the size of the organization (SME).
If linear, then its location shall be within the financial, sales or control, dependence on these functions get the homogenization of the complementary roles.
support If it were then its location will depend on the management, the same exercise direct control and supervise the activities identified.
In either case, always considered a dependent or independent staff advice from legal counsel and / or a specialist in the field.
then propose some models of organizational structure, hierarchy and location of Credit and Collections department in the organization of a firm of average capacity.
9.5. RELATIONSHIP OF THE DEPT. CREDIT AND COLLECTIONS TO OTHER AGENCIES
The credit and collections department can work efficiently only through the cooperation of other departments, but their relationship is close and continuing with the departments, Sales, Finance and Accounting. Such cooperation can and must take the positive form of a harmonious and whole.
The least the credit department and charges due to the sales department is to notify immediately the denial of credit to a new customer or the withdrawal of an existing customer with a brief explanation of the reasons for doing so, the notice must give the chief credit and collections to sales .
it may transmit to the client willing seller, in order to avoid inconvenience to visit.
addition to matters related to finance is important to have accurate information in a program to specify the amount of money to be recovered through charges. Accounting
should act as information provider control and accounting records for revenue, expenditures and balances of accounts receivable.
9.6. SPECIFIC DUTIES OF THE HEAD OF CREDIT AND COLLECTION
The most common specific functions of a Credit and Collections department are:
a) Granting of Credits : grant loans to customers who wish to purchase by this method, under conditions which are set by the company, taking into account the analysis of it using the information gathered, trying as far as possible subject to existing regulations.
b) Study of the State Finance and Information attached: is recommended economic and financial information provided to customer to get a better position in the decision to grant credit. For legal persons is indispensable to analyze financial statements, allowing us to consider it as a good credit or in extreme cases, disapprove.
c) Effective Management of Collection : The collection efforts should be undertaken with clients to display a little hard on your payments, you must take into account the reason for such delay and the Chief Credit should consider measures to be taken in case of further delay (negotiation).
These steps are very important, and give good results for recovery of debt recorded in the documents expired.
d) Reports to Management : must submit reports to General Manager, relating to the appropriations requested, amounts, whether approved or disapproved, and the number of clients that request, complementing this, the report to be spending every month to moving accounts, which are in the pipeline in the section collection, and analysis of these in terms of backwardness.
e) Control of their staff : As Head of Credit Department and Collections, is obligated to supervise the staff in charge, enforcing the rules and regulations established by the company on this issue.
f) Determination of Bad Debts : In any business, the risk of lending to poor caused the birth of debts (Portfolio Heavy) avoiding any internal control and implemented, and is the responsibility of the Head of Credit and collections based on their criteria and experience, to set those customers to whom it is futile exercise any collection action by considering them bad debtors.
g) Tonnage Documents: One of the foundations of internal control within Collections department, is to practice tonnages of documents that allow us to establish the accuracy of the figures in the accounts of each customer, checking cards that are carried in the accounting department.
We can summarize the tonnage of the following documents:
9.1. ORGANIZATIONAL UNIT OPERATING
From organizational point of view of the credit process prior to the collection, but all the operations of these functions are complementary and interlinked by a comprehensive process that allows them together to a single function, hence born homogeneous operations that must be a single unit operation. (Principle category).
For this reason the combination of both activities in a single task force is recommended to handle them, ie directing credit and collections under the responsibility of one person and organizational structure already defined from the start of activities.
Considering the inherent risk factor is given credit for companies that have decided to implement a credit system as an alternative to increasing sales, but the recovery is performed by another specialist firm, a move that is interpreted as demand greater accountability of who develops this role, but in any case the supplementary charge is still made even if the other organization other than the company.
Depending on the importance of the activity, responsible for implementing the credit and collections functions, occupies a key position in the firm, which is increasing the responsibility of both to help increase sales and to allow recovery of capital through a cash payment.
9.2. DESIGN OF THE STRUCTURAL ACTION OF THE DEPT. Credit & Collection
Regardless of the size of the organizational structure of the company is the wholesaler, retailer, distributor representative, the first things you will ever make the person or persons responsible, will be to implement a work plan identifying the following General: Set
- general policies on the coordination of the operational management of credit and collection.
- design a system that is appropriate to the needs of the company even if it does not have the necessary structure.
- elaborate and print forms, appropriate to the activities that the company plans to develop monitoring and control. Request
- staff deemed necessary to operationalize and implement the system.
- establish interconnection with other major and minor areas available to the company, such as Sales, Warehousing, Accounting, Records, Box, etc. Finance.
But every function that complements an organization must have goals coming from the purpose or nature by which to materialize the objectives.
9.3. OBJECTIVES FOR THE CREATION OF THE RECEIVABLES AND COLLECTIONS OPERATE
The priority objectives must necessarily be based on the Material Resources Human and conditions available to the company if you implement a system of credits and collections.
As far as possible be taken into account:
- All purpose will be to increase sales through the credit in their sales systems should consider the creation of credit and collections function.
- Its purpose is to increase sales by credit and capital recovery through the collection.
- must conform to the socio-economic and political where the company operates, to allow the flow of credit as an act of commercial reward and financial gain.
- must be counted a number of staff required and trained (not scheduled) to accomplish his assigned duties.
- should implement a communication flow between the functions of sales, accounting, finance, stores, and management, having responsibility and hierarchy in the credit and collection decisions and relate to each other.
- constitute a means integrated with other parts of the company, considering that the credit and collection concerns the entire staff for the important role that the organization currently has.
This structure will allow management bodies have an efficient and accurate timely reporting.
We must not forget that for the collection to fulfill its purpose, the communication must be timely so that the information reaches the decision means when this is required.
is also necessary to note that when you restructure a credit bureau and collection should be emphasized that this structure varies from one company to another, from one business type to another, although there are certain core functions that are common to all.
therefore should not make the mistake of design department literally the structuring of credit and similar charges by another company, even if this could mean lower costs and apparently work a minimum.
9.4. LOCATION OF THE ROLE OF RECEIVABLES AND COLLECTIONS IN THE CORPORATE STRUCTURE
This depends on the interest to put the entrepreneur or executive officer to execute this function.
Regardless of this, we can say that its location within the organizational structure may be linear or support. It can also refer that this decision will depend on the size of the organization (SME).
If linear, then its location shall be within the financial, sales or control, dependence on these functions get the homogenization of the complementary roles.
support If it were then its location will depend on the management, the same exercise direct control and supervise the activities identified.
In either case, always considered a dependent or independent staff advice from legal counsel and / or a specialist in the field.
then propose some models of organizational structure, hierarchy and location of Credit and Collections department in the organization of a firm of average capacity.
9.5. RELATIONSHIP OF THE DEPT. CREDIT AND COLLECTIONS TO OTHER AGENCIES
The credit and collections department can work efficiently only through the cooperation of other departments, but their relationship is close and continuing with the departments, Sales, Finance and Accounting. Such cooperation can and must take the positive form of a harmonious and whole.
The least the credit department and charges due to the sales department is to notify immediately the denial of credit to a new customer or the withdrawal of an existing customer with a brief explanation of the reasons for doing so, the notice must give the chief credit and collections to sales .
it may transmit to the client willing seller, in order to avoid inconvenience to visit.
addition to matters related to finance is important to have accurate information in a program to specify the amount of money to be recovered through charges. Accounting
should act as information provider control and accounting records for revenue, expenditures and balances of accounts receivable.
9.6. SPECIFIC DUTIES OF THE HEAD OF CREDIT AND COLLECTION
The most common specific functions of a Credit and Collections department are:
a) Granting of Credits : grant loans to customers who wish to purchase by this method, under conditions which are set by the company, taking into account the analysis of it using the information gathered, trying as far as possible subject to existing regulations.
b) Study of the State Finance and Information attached: is recommended economic and financial information provided to customer to get a better position in the decision to grant credit. For legal persons is indispensable to analyze financial statements, allowing us to consider it as a good credit or in extreme cases, disapprove.
c) Effective Management of Collection : The collection efforts should be undertaken with clients to display a little hard on your payments, you must take into account the reason for such delay and the Chief Credit should consider measures to be taken in case of further delay (negotiation).
These steps are very important, and give good results for recovery of debt recorded in the documents expired.
d) Reports to Management : must submit reports to General Manager, relating to the appropriations requested, amounts, whether approved or disapproved, and the number of clients that request, complementing this, the report to be spending every month to moving accounts, which are in the pipeline in the section collection, and analysis of these in terms of backwardness.
e) Control of their staff : As Head of Credit Department and Collections, is obligated to supervise the staff in charge, enforcing the rules and regulations established by the company on this issue.
f) Determination of Bad Debts : In any business, the risk of lending to poor caused the birth of debts (Portfolio Heavy) avoiding any internal control and implemented, and is the responsibility of the Head of Credit and collections based on their criteria and experience, to set those customers to whom it is futile exercise any collection action by considering them bad debtors.
g) Tonnage Documents: One of the foundations of internal control within Collections department, is to practice tonnages of documents that allow us to establish the accuracy of the figures in the accounts of each customer, checking cards that are carried in the accounting department.
We can summarize the tonnage of the following documents:
- bill
- portfolio of letters of debit memos
- of protested bills of bad checks
- of documents power of judicial manager
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