Podcast
Questions and Answers
What should be included when rebilling a customer for a deduction?
What should be included when rebilling a customer for a deduction?
- A discount coupon
- A detailed report of past transactions
- A personalized thank you note
- A copy of the group service agreement (correct)
When should a credit professional follow up with a phone call to a customer's accounts payable manager?
When should a credit professional follow up with a phone call to a customer's accounts payable manager?
- After a deduction is resolved
- After a customer complaint is filed
- After sending the initial introduction letter (correct)
- After the first payment is received
What is one benefit of using software to track promises and deadlines in debt collection?
What is one benefit of using software to track promises and deadlines in debt collection?
- It automatically writes off bad debts.
- It minimizes the chance of losing track of customers. (correct)
- It guarantees all debts will be paid on time.
- It eliminates the need for collection professionals.
Why is it important to resolve complaints and discrepancies quickly?
Why is it important to resolve complaints and discrepancies quickly?
How can specializing in debt collection improve outcomes?
How can specializing in debt collection improve outcomes?
What should a credit professional do immediately after identifying a deduction?
What should a credit professional do immediately after identifying a deduction?
What is a potential risk of putting customers on credit hold?
What is a potential risk of putting customers on credit hold?
What does DSO stand for in the context of debt collection?
What does DSO stand for in the context of debt collection?
What action should be taken if the backup paperwork is not provided by the customer?
What action should be taken if the backup paperwork is not provided by the customer?
Which payment method has gained favor as a way to improve collections and reduce costs?
Which payment method has gained favor as a way to improve collections and reduce costs?
How can billing staff contribute to improving collections on short-paid invoices?
How can billing staff contribute to improving collections on short-paid invoices?
What is one of the common types of ACH credits?
What is one of the common types of ACH credits?
What is an effective response to a customer who has calculated a discount incorrectly?
What is an effective response to a customer who has calculated a discount incorrectly?
What should credit departments do when customers take unauthorized deductions?
What should credit departments do when customers take unauthorized deductions?
Why is it important to act quickly in the debt collection process?
Why is it important to act quickly in the debt collection process?
Which of the following techniques may not be effective for every type of customer?
Which of the following techniques may not be effective for every type of customer?
What is one recommended technique for reducing bad-debt write-offs?
What is one recommended technique for reducing bad-debt write-offs?
Why is it important to maintain good communication with the sales force?
Why is it important to maintain good communication with the sales force?
Which of the following is NOT a common method used to calculate a bad-debt reserve?
Which of the following is NOT a common method used to calculate a bad-debt reserve?
The concept of following up with customers is primarily aimed at achieving what outcome?
The concept of following up with customers is primarily aimed at achieving what outcome?
What factor can significantly influence the calculation of a bad-debt reserve?
What factor can significantly influence the calculation of a bad-debt reserve?
What is a common misconception about achieving zero bad-debt write-offs?
What is a common misconception about achieving zero bad-debt write-offs?
What might happen if a credit professional waits too long to contact a customer about late payments?
What might happen if a credit professional waits too long to contact a customer about late payments?
What is one consequence of maintaining poor dialogue with customers?
What is one consequence of maintaining poor dialogue with customers?
What action should sellers take regarding inconsistent terms in buyer documents?
What action should sellers take regarding inconsistent terms in buyer documents?
What is a major risk associated with confirming purchase orders?
What is a major risk associated with confirming purchase orders?
Why do companies reserve for bad debts?
Why do companies reserve for bad debts?
In the context of an improving economy, what action might a company take regarding bad debts?
In the context of an improving economy, what action might a company take regarding bad debts?
What does the initial acceptance of a purchase order imply?
What does the initial acceptance of a purchase order imply?
How do companies typically react to rising bad debt during a recession?
How do companies typically react to rising bad debt during a recession?
What conclusion can be drawn about companies with no reported bad debts?
What conclusion can be drawn about companies with no reported bad debts?
What is often the primary motivation for a company to adjust its bad-debt reserves?
What is often the primary motivation for a company to adjust its bad-debt reserves?
What is the primary method suggested to prevent unauthorized deductions?
What is the primary method suggested to prevent unauthorized deductions?
What should be included in a letter sent after the first occurrence of an unearned discount?
What should be included in a letter sent after the first occurrence of an unearned discount?
In case of a deduction, what is the first step to take if it's deemed invalid?
In case of a deduction, what is the first step to take if it's deemed invalid?
What is a proactive measure to verify purchase orders?
What is a proactive measure to verify purchase orders?
How can customers submit complaints for unresolved issues?
How can customers submit complaints for unresolved issues?
What should you do if the first contact person at a customer’s company refuses to resolve a dispute?
What should you do if the first contact person at a customer’s company refuses to resolve a dispute?
What documentation should be included in the follow-up letter after a deduction?
What documentation should be included in the follow-up letter after a deduction?
What effect does informing customers that unearned discounts will not be tolerated tend to have?
What effect does informing customers that unearned discounts will not be tolerated tend to have?
Study Notes
Purchase Orders and Confirmation
- Sellers often reject any inconsistencies in buyer documents regarding terms and conditions.
- Buyers may confirm phone orders with written purchase orders, which can introduce unexpected terms.
- A cautious approach is necessary to avoid misunderstandings; confirming purchase orders should not be assumed to reflect oral agreements.
Bad-Debt Reserves
- Companies typically set aside reserves for bad debts as part of normal business operations.
- An absence of bad debts may indicate overly strict credit policies, which limit sales potential.
- Economic conditions influence bad-debt reserves; companies should adjust policies in response to economic downturns or improvements.
- Calculation methods for bad-debt reserves vary, commonly using percentages of sales or outstanding receivables.
Techniques to Reduce Bad-Debt Write-Offs
- Initiate early contact with customers regarding account statuses to prevent overdue deliveries and payments.
- Maintain open communication between credit managers and sales personnel to identify potentially risky customers.
- Regular follow-ups encourage timely payments and act as reminders for outstanding debts.
- Implement systematic tracking of promises and deadlines through software to minimize oversight.
- Designate a specialized collection team for managing overdue accounts to improve performance.
- Use credit holds to incentivize payments but be cautious of potential backfiring if the customer has alternatives.
Electronic Payments and ACH
- Electronic payments improve Days Sales Outstanding (DSO) and decrease collection costs.
- Automated Clearing House (ACH) payments, like direct deposits, are increasingly used for various transactions.
Prevention of Unauthorized Deductions
- Educate the sales force on the importance of resolving issues before invoice payment to prevent deductions.
- Communicate a zero-tolerance policy for unauthorized deductions to deter customers from taking liberties.
- Ensure that purchase orders align with sales terms; discrepancies should be corrected before processing.
Resolving Deduction Problems
- Quickly assess the validity of deductions and request reimbursements if necessary.
- Identify and address underlying causes of frequent deductions to improve future issue resolution.
- Follow up persistently to obtain necessary documentation from customers regarding deductions.
- Create a system for customer complaints to facilitate prompt problem resolution.
Strategies for Resolving Deduction Issues
- Send immediate rebills for unauthorized deductions, including policy documentation to reinforce seriousness.
- Develop relationships with customer accounts payable managers to enhance communication and cooperate effectively.
- Resolve disputes swiftly to avoid delays and reinforce the expectation that unauthorized deductions are unacceptable.
- Train billing personnel to proactively review short-paid invoices while collections teams focus on larger issues.
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Description
This quiz covers key aspects of handling purchase orders, including the importance of standard terms and conditions. It addresses common pitfalls, such as confirming orders placed via telephone and understanding the implications of small print. Test your knowledge to ensure effective transaction management.