Accounts Receivables Collection

Receivables Factoring refers to a process in which you can sell invoices to a financing company for a rate, lower than the nominal value of the invoice sold.

The responsibility to collect money against outstanding receivables lies with the finance company, which then makes a profit by raising funds at nominal value of the invoice. The advantage of this arrangement is that a company can receive instant cash, which was otherwise tied up in inventory, to further expand the business.

Again, the responsibility to collect money against invoices up to the finance company. To raise the money, the financing company needs to maintain the current outstanding loans and then work out a time line to collect the money. Furthermore, it is very important to keep a track or record all communications that have taken place between the finance company and customers. This can be done by keeping records of copies of letters, notes, date and time of call and the name of the person contacted.

The company first sends a friendly reminder letter for the customer to remind him that the date of the invoice has expired. In addition to sending in the form of a formal reminder letter, the company also in contact with the customer by phone. Besides sending a reminder, the call is also intended to speak to the customer personally and ask for the reason for the late payment. For example, the payment would be delayed because of problems with sales or goods and this may require sorting.

After the first letter and phone call, the company waits for a few days for the customer's response and then once again, send the letter and billing makes another call as a reminder. If after this there is still no response, the company then contact the customer with the letter collection agency. This is basically to give the client one last chance to clear his debts ....