Accounts Receivable Management Best Practices

In today’s global marketplace, competitive pressure and industry practice mandate that products and services be sold on a credit vs. cash-on-delivery basis. This practice often produces a receivables asset that is one of the largest tangible assets on a company’s balance sheet. A review of the 2004 Fortune 500 certainly reveals this truth. Receivables ranked among the top three tangible assets for 75% of the top 100 companies. Surprisingly, management of this multi-million (or multi-billion) dollar asset rarely receives much senior management attention, except when a serious problem develops. The custodians of the receivables asset are similar to umpires of a baseball game; they are not noticed unless they do a bad job.

This book discusses the importance of managing accounts receivable, and provides proven principles for achieving benefits such as increased cash flow, higher margins, and a reduction in bad debt loss. The focus is primarily on commercial (business to business) receivables management. It excludes the specifics of managing retail (business to consumer), healthcare provider (third party reimbursement), and intercompany receivables. The principles described apply to all business-to-business commerce, but will often need to be tailored to industry-specific practices.

The Best Practices in this book are real-world, field-tested practices. They were developed, refined, and improved by the author over a 16 year period while working with over 100 companies in a wide range of industries to generate tangible, measurable improvements in the management of customer receivables. Examples drawn from those engagements will be used throughout the book to illustrate real-world problems and solutions that drive measurable results.

This book is designed for all managers who are responsible for managing the receivables asset, either directly, such as directors of customer financial services and credit managers or indirectly, such as controllers, treasurers, and CFOs. Reading this book will enable readers to better understand how to manage this important asset while learning numerous practical techniques that can be implemented immediately to drive improvement.

About the Author

JOHN G. SALEK is the National Leader of the Receivables Cycle Management Practice of Parson Consulting, a large financial consulting firm with offices throughout the United States and United Kingdom. He is a veteran financial professional with proven performance in receivables cycle management, including order and contract processing, billing, dispute management, credit control, collections, and cash application. He has worked in a broad range of industries, including healthcare, publishing, leasing, distribution, and software. He has contributed white papers and articles to Credit Today and Parson Consulting's newsletter, Knowledge@Work, and has been quoted in the Wall Street Journal, Business Finance, and Modern Healthcare.