This comprehensive item has a number of strategic implications for the company. On the one hand, it is an effective lever for building long-term business relationships by granting payment terms to customers, especially the most loyal. On the other hand, the company must control its customer risk to avoid excessive cash shortfalls that could jeopardize its ability to pay its suppliers.<\/p>\n
How do you calculate outstanding receivables?<\/h2>\n
![\"calcul](\"\/wp-content\/uploads\/calcul-encours-client.jpg\")
<\/p>\n
There are two steps to calculating outstanding receivables:<\/p>\n
- \n
- the sum of invoices issued, due and not due ;<\/li>\n
- subtracting advances and deposits already paid by customers.<\/li>\n<\/ol>\n
The formula for calculating trade receivables is therefore as follows:<\/strong><\/p>\n
Outstanding customer accounts = (invoices issued + invoices overdue + invoices not overdue) \u2013 (advances + deposits).<\/em><\/p>\n
How do you assess customer risk?<\/h2>\n
![\"gerer](\"\/wp-content\/uploads\/gerer-encours-clients-300x200.png\")
<\/p>\nBefore attempting to manage outstanding receivables, it is essential to assess the risk they represent. In fact, depending on your receivables management policy, payment terms<\/a> can be relatively short. As a result, the risk of non-payment is reduced, as is the risk of cash shortfalls. Your WCR is also reduced.<\/p>\n
However, in addition to a clear customer receivables management policy that is relevant to the company\u2019s business, there is an effective way of assessing customer risk. It\u2019s called scoring.<\/p>\n
Using this credit management<\/a> method, you assign a score to each of your customers according to their risk profile. The higher the score, the more likely the customer is to benefit from payment facilities. On the other hand, if a customer\u2019s profile is considered risky, he or she should pay on account, in cash, etc.<\/p>\n
Scoring enables you to assess the risk represented by outstanding receivables in detail for each customer.<\/p>\n
How do you manage outstanding receivables?<\/h2>\n
The aim of receivables management is not only to limit late payments, but also to reduce customer disputes.<\/p>\n
To optimize the management of your outstanding receivables, here are 8 best practices to adopt:<\/p>\n
- \n
- perform an audit ;<\/li>\n
- regularly monitor customer risk ;<\/li>\n
- define a collection procedure ;<\/li>\n
- update the general terms and conditions of sale ;<\/li>\n
- involve teams ;<\/li>\n
- outsource the management of outstanding receivables ;<\/li>\n
- appoint a credit manager ;<\/li>\n
- equip yourself with an effective credit management tool.<\/li>\n<\/ol>\n
DISCOVER OUR CREDIT MANAGEMENT TOOL<\/a><\/p>\n
1 \u2013 Performing an audit<\/h3>\n
![\"encours](\"\/wp-content\/uploads\/encours-client-1-300x200.jpg\")
<\/p>\nTo get an overview of the situation, we recommend starting with an audit of your receivables management policy. This includes payment rules, pre-collection processes and collection procedures.<\/p>\n
In addition, you will analyze the composition of outstanding receivables: what types of invoices are there? Are there any overdue invoices? Who are the customers in arrears? etc.<\/p>\n
In this way, you\u2019ll be able to identify the areas for improvement you need to work on in order to gain greater control over outstanding receivables.<\/p>\n
2 \u2013 Regular monitoring of customer risk<\/h3>\n
If the audit is carried out over a given period of time, the follow-up must be carried out on a regular basis. For example, weekly and\/or monthly.<\/p>\n
This enables you to anticipate potential disputes, and to be responsive to customer reminders<\/a> when necessary.<\/p>\n
3 \u2013 Define your collection procedure<\/h3>\n
![\"calcul-encours\"](\"\/wp-content\/uploads\/calcul-encours.jpg\")
Because it\u2019s impossible to eliminate all risk of non-payment in a company, it\u2019s essential to put in place an effective collection procedure<\/a>.<\/p>\nEmployees in charge of reminders and litigation procedures must know how to :<\/p>\n
- \n
- at what pace to carry out the various reminders;<\/li>\n
- in what format (e-mail, simple or registered mail, telephone reminder) ;<\/li>\n
- the rules applicable to each customer according to their profile.<\/li>\n<\/ul>\n
4 \u2013 Update general sales conditions<\/h3>\n
The company\u2019s General Terms and Conditions of Sale (GTCS) determine the rules applicable to both customers and the company. It is therefore essential to keep them up to date, to ensure that they are always in line with the company\u2019s outstanding receivables management policy, and that payment terms and conditions are consistent with it.<\/p>\n
In addition, internal teams need to be aware of the best practices to adopt when drawing up contracts. This applies in particular to the payment terms granted and the means of payment available, depending on the customer\u2019s score, as well as the negotiation margins available.<\/p>\n
5 \u2013 Involving teams<\/h3>\n
![\"gestion](\"\/wp-content\/uploads\/gestion-encours-client-300x200.jpg\")
<\/p>\nManaging outstanding receivables is not just a matter for the Chief Financial Officer (CFO) or the collections team, it\u2019s also a key issue for sales teams.<\/p>\n
![\"comment](\"\/wp-content\/uploads\/comment-calculer-l-encours-client-300x200.jpg\")
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