M35ManageFinance· Module 4
Receivables and Collections
Customers pay when they choose. Credit terms are agreed case by case and followed up when someone remembers.
- Stabilise
- Fix
- Manage
- Finance
- Customers
- ~5 min · Checklist
The business problem
Many businesses extend credit informally, without limits or checks, and chase payments only when cash is short. Overdue balances grow, some become bad debts, and relationships suffer because collections feel personal.
Why it matters
Receivables are often the largest source of trapped cash. A clear policy and a consistent routine collect faster and protect customer relationships because the rules are the same for everyone.
What you will learn
- Write a credit policy: who gets credit, how much, on what terms
- Run an aged receivables report and act on it
- Design a weekly collections routine
- Handle disputes and bad debts consistently
Core questions
- Who decides which customers get credit, and how much?
- How much is overdue, and by how long?
- Who follows up, and on what schedule?
- When do we stop supplying a customer?
Work through the module
CaseWhat is happening?
Office supplies company, 25 people · Illustrative teaching case
An office supplies company has overdue receivables approaching two months of sales. Sales staff set terms to win orders and are reluctant to chase their own customers. The business introduces credit limits approved by finance, a weekly aged-debt review, and a collections schedule run by a dedicated person with a clear escalation path.
Full teaching case: Revenue Without Cash
DecisionWhat does the leader need to decide?
Leave collections to sales relationships, or run them as a separate, rule-based process?
FrameworkHow should they think about the problem?
Credit policy + collections cadence
Before credit: approve limit and terms. At invoice: accurate and on time. Before due: reminder. At due: call. Overdue: escalate on a fixed schedule; stop supply at a defined point. Same rules for everyone.
ToolWhat can they use?
Collections routineChecklist
- Aged receivables report every Monday
- Reminders 5 days before due
- Calls on due date
- Escalation at 15, 30 and 45 days overdue
- Stop-supply rule and authority
ApplicationHow does it apply to their business?
Apply it to your own business:
- Run your aged receivables report
- List your ten largest overdue balances and why they are late
- Write your credit rules
ImplementationWhat changes?
What should change in the business:
- Assign one owner for collections
- Run the weekly routine
- Pay sales incentives on cash collected, not only sales
ReviewDid it work?
How to tell whether the change worked:
- Has days receivable fallen?
- Has the share over 60 days fallen?
- Have bad debt write-offs reduced?
After this module you should be able to decide
Leave collections to sales relationships, or run them as a separate, rule-based process?
And leave with: A credit policy and a weekly collections routine.
Sequence · Finance