THE PROBLEM AND ITS APPROCH
Effective management of accounts receivable present important opportunities for companies. The primary objective of accounts receivable management is to collect money due and to assist in meeting cash requirement. An effective accounts receivable function can assist in achieving the desired cash flow out come through the timely collection of out standing debts. All companies have an objective of continually improving customer service and most of them are required to perform public service under full or partial cost recovery arrangement. Effective accounts receivable management can assist in improves customer service through providing timely information on customer requirement and by making dealing with customer as easy as possible. Good accounts receivable management also helps the companies to spot problem in accounts receivable early enough to protect the company from major revenue problem. It may also assist in highlighting individual delinquent accounts. In addition to measuring the effectiveness of accounts receivable process as a whole specific debt collection techniques and their effectiveness should be monitored. This information can be used when assessing alternative debt collection strategies it is of assistance when conducting assessments of this type to be cognizant of the cost of the relative collection strategies. An important consideration in this process is the cost of measuring and analyzing performance data. Where companies should seek to have performance information of activates such as accounts receivable as part of their financial management information system.
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