Collections Practices and Metrics

It’s not enough to simply send the invoices out—companies must also make sure they are paid. Unfortunately, whether due to a simple slip of the mind, blatant disregard, or some unresolved problem, many customers are quite not so forthcoming with the cash. That’s why the collections function is a critical part of the overall accounts receivable operation.

To find out how companies have set up their all-important collections functions, the AR & O2C Network conducted a study of collection practices among more than 200 companies representing a wide range of industries and sizes.

Overview of the Collections Function

Here is an overview of the collections function:

Responsibility for handling collections. In nearly half (48 percent) of organizations studied, collections is handled by collection specialists. This correlates generally to the size of the organization—the larger the organization, the more often the responsibility rests on the shoulders of collections specialists. Collections duties may also be handled by accounting staff, the AR manager, or credit managers.

 

Reporting relationships in collections. Over one-third (37 percent) of collections staff report to an accounts receivable manager or director. In other organizations, ...

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