Accounts receivable management (ARM) is a set of policies and procedures to ensure that owed payments are collected on time, in their entirety and credited to the proper account. The collection agency payment process is done in compliance with federal and state laws and regulations.
If the consumers do not pay the amounts they owe then the debt may be turned over to a collection agency. The collection agency then initiates the process of collecting the debt.
Credit policies
Establish a credit policy and stick to it. Define the conditions under which you will extend credit, how much credit you’ll give, and to whom. Choose your preferred methods of payment, how you will determine credit worthiness for new customers, requirements for deposits, and interest charges on late accounts.
Billing policies
Generally, the frequency with which you bill dictates the frequency with which you’ll receive payment. Choose your invoicing intervals, clearly communicate billing terms to customers, and consider offering discounts for early paying customers.
Monthly statements
Statements serve more than one purpose: sent early, they are a proactive step. They remind customers, and they serve as documentation in instances when an account falls into collections.