receivables management

The receivables management policy is not really the same as the credit control policy. While both concepts are related to managing and controlling credit, they have distinct “focuses and objectives”.

Receivables management policy refers to the overall strategy and guidelines for managing a company’s trade receivables. It involves determining the credit terms and conditions, assessing the creditworthiness of customers, establishing credit limits, monitoring and collecting outstanding receivables, and managing the overall credit risk.
The goal of the receivables management policy is to “optimise the company’s cash flow, minimize bad debts, and maintain a healthy balance between sales and credit risk.”

Whilst credit control policy specifically focuses on the control and regulation of credit extended to customers. It involves setting credit limits, evaluating creditworthiness, establishing credit terms, and enforcing credit policies and procedures. The primary objective of credit control policy is “to mitigate the risk of non-payment and ensure timely collection of outstanding debts.”

While receivables management policy encompasses credit control as one of its components, it also includes other aspects such as credit analysis, receivables collection, and changes to credit policy. Credit control policy, on the other hand, is more narrowly focused on the control and regulation of credit.