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About Dalda:

Introduction

History
Daldas story begins in early 1930s when Hindustan Vanaspati Manufacturing Co (todays
Hindustan Lever Limited) wanted to start manufacturing Vanaspati locally. At that time
hydrogenated vegetable oil was imported in India by a Dutch company, Dada & Co. Dada & Co,
insisted that the branded product should reflect their name, hence in a bid to establish their
ownership of the brand Hindustan Lever introduced the letter L for Lever into the name; giving
rise to the name DALDA.
Dalda Banaspati through its promise of superior quality & taste has won the hearts millions of
consumers making it not only a household name in the sub-continent by synonymous with the
genre vanaspati.
Dalda, in its quest to meet the changing needs of its consumers; entered the oils segment through
the launch of Dalda Cooking oil.
In 1999 Unilever acquired International Technology to evolve Dalda Banaspati to Dalda VTF,
making it the only Virtually Trans-fat Free Bansapati in Pakistan.
In July 2004 Unilever Pakistan sold its "Dalda" brand to Westbury Group in collaboration with
Unilever Employee Welfare Group, who formed a separate company
Under Dalda Foods (Private) Ltd.
Dalda Foods (pvt) ltd took Daldas over 60 years of heritage combined with continuous
innovation and indepth consumer understanding and maintenance of high quality standards has
made it the leading brand in the Cooking Oil and Fats industry.
Within a short span of 4 years Dalda Foods expanded its Brand Portfolio through the launch of
Manpasand; to meet the needs of the vast middle-income segment. Manpasand Banasapti and
Cooking oil was launched at end-2005 and has grown to become one of the most formidable
players in the industry.
The Dalda portfolio was also expanded to seize the opportunity arising from changing consumer
lifestyles and increased health awareness; the company entered the pure-oil segment in early

2007 through the launch of Dalda Canola & subsequently Dalda Olive oil.
In a bid to expand capacity and further strengthen position in the premium segment and enter the
lower-income segment; Dalda Foods acquired the brand Tullo & Pride from Wazir Ali
Industries in January 2007.

Market Offering
Market offering is some combination of products, services, information, or experiences offered
to market to satisfy a need or want.
The major offerings of Dalda foods are Vanaspati Ghee and Cooking Oil. Besides these the
company also offers some beverages as well. The major offerings are available as a complete
product line covering different price and quality ranges.

Products
Dalda VTF Banaspati

Daldas journey into the lives of its consumers started almost 60 years ago when Daldas food
scientists pioneered a way of preserving the goodness of vegetable oils in a manner which not
only preserved the taste of desi ghee but was a healthier alternative cooking medium- thus Dalda
Banaspati was born.
Over time keeping in line with the changing consumer needs Dalda Banaspati evolved to become
Dalda VTF Banaspati. Dalda VTF Banaspati is the only banaspati in Pakistan which is virtually
Trans-fats Free (VTF).
Trans-fats cause significant and serious lowering of HDL (good) cholesterol and a significant and
serious increase in LDL (bad) cholesterol; make the arteries more rigid; cause major clogging of

arteries; cause insulin resistance; cause or contribute to type 2 diabetes; and cause or contribute
to other serious health problems. This is why a worldwide campaign against Trans-fats has led to
a ban on its use in major developed countries. However such realization in countries like
Pakistan will take a while but Dalda complies with worldwide quality standards and hence Dalda
Banaspati is virtually Trans-fats Free since 1999.
Any ordinary banaspati brand contains up to 25% of these harmful Trans-fats; however Dalda
using its International Technology and Expertise has reduced the amount of Trans-fats in its
banaspati to less than 1%. This makes Dalda VTF Banaspati the healthiest banaspati available in
Pakistan.
Dalda Cooking Oil

Not only was Dalda the pioneer in banaspati but also keeping in mind the changing lifestyle of
its consumers Dalda introduced cooking oil to the market.
Dalda Cooking Oil is a premium blend of canola, sunflower and soybean oil, which is then
hygienically refined to perfection using Daldas state of the art plant and International
Technology and Expertise. This process of refining is specially designed to preserve the natural
goodness of each of the individual oils in the blend. Hence the optimum goodness of each
canola, sunflower and soybean reaches the consumers.
Dalda Cooking Oil is 100% cholesterol free and contains Vitamin A and D together with Vitamin
E which protects from skin and heart diseases. It also contains essential fatty acids, Omega 3 and
6 and natural antioxidants that boost the immune system of the body. Thus food cooked in Dalda
Cooking Oil is not only delicious but also exceptionally nutritional.
Planta Cooking Oil

In its quest for innovation Dalda introduced Planta Cooking Oil for consumers who were
reluctant to shift to cooking oil from desi ghee. Thus Planta Cooking Oil became the only
cooking oil to contain the goodness of oil and the delectable taste of ghee. It is a blend of
soybean, canola and sunflower oil and is 100% cholesterol free. It also contains Vitamins A and
D. This makes food cooked in Planta Cooking Oil tasty as well as very healthy.
Dalda Canola Oil with Vitamin Power

Dalda also expanded its product range to include Dalda Canola Oil with Vitamin Power.
Extracted from fresh canola seeds, Dalda Canola Oil with Vitamin Power not only provides the
benefits of Canola oil but also additional nutrients to give consumers extra energy, superior
health and great taste essential for a modern and demanding lifestyle.
It is these properties and the additional Vitamin Power in Dalda Canola Oil which make it a
much superior product and an ideal choice for Canola oil consumers.
Dalda Olive Oil

Another novel product by Dalda is Dalda Olive Oil. Dalda Olive Oil is packaged and imported
from Spain. Using its International Technology and Expertise, Dalda ensures that its olive oil
is extracted from the purest and freshest hand picked olives from the fertile lands of Spain, which
are then refined to perfection using the most advanced International Technology under stringent
quality standards within Spain. Dalda Olive Oil is 100% cholesterol free and enriched with
exceptional Shifa and health benefits of olives, and fortified with additional Vitamin A and E to
provide its consumers life with the smile and sparkle that it deserves. Find out more about the
benefits of Dalda Olive Oil.
Dalda Olive Oil is available in three variants Extra Virgin, Pure, and Pomace. The difference
between the variants of Dalda Olive Oil is their acidity level, which affects mostly taste and not
nutritional content.

Dalda Olive Oil Extra Virgin


Dalda Olive Oil Extra Virgin is from the first pressing of the olives and has a strong flavor and
aroma with all natural vitamins. It is naturally enriched with vitamins and anti-oxidants which
may help prevent against heart disease and cancer.
Dalda Olive Oil Pure
Dalda Olive Oil Pure is a blend of refined and virgin olive oil. It is refined using Daldas
International Technology. It has a medium flavor and aroma and contains natural vitamins.
Dalda Olive Oil Pomace
Dalda Olive Oil Pomace is refined and filtered using Daldas International Technology. It has a
light flavor and aroma. It has additional vitamin A as well as natural vitamins.
Manpasand

Manpasand Banaspati
Manpasand Banaspati is produced using the most advanced technology and fully automatic plant

under stringent international quality and health standards. It is manufactured using similar
plant/technology which is used to make Dalda.
Manpasand Banaspati with its granular texture; has a distinguished aroma and taste which
enhances the flavor of the food to an unprecedented level.
Manpasand Banaspati is economical in use and enriched with Vitamins A & D to ensure healthy
and great tasting food for your family.
Manpasand Cooking Oil
Manpasand Cooking Oil is produced using the worlds best vegetable oils on Pakistans most
advanced plant under stringent international health and hygiene standards.
Manpasand Cooking Oil is a premium blend of Canola, Soybean and Cottonseed Oil. Manpasand
Cooking Oil is best suited for all types of cooking, as it is economical in use and cholesterol free.
It is enriched with Vitamins A and D, which provide your family the health and care they
deserve.

Pricing
Companies use different pricing strategies to position their brand effectively in the market. Dalda
foods have set prices that are easily affordable by its target customers.
Price ranges in Premium A Segment:
Price for banaspati ghee ranges from 115-130/kg
Price for Cooking Oil ranges from 125-140/litre
Price ranges in Premium B Segment:
Price for banaspati ghee ranges from 100-115/kg
Price for Cooking Oil ranges from 110-125/litre
Price ranges in Mid Price A Segment:
Price for banaspati ghee ranges from 95-100/kg

Price for Cooking Oil ranges from 100-110/litre


Price ranges in Mid Price B Segment:
Price for banaspati ghee ranges from 85-95/kg
Price for Cooking Oil ranges from 90-100/litre

Customer Relationship Management


The customer relationship management is the overall process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction.
The two building blocks for profitable relations with customers are:

Customer Value
Customer Satisfaction

A customer buys from the firm that offers the highest Customer Perceived Value. And most
convenient form of payment, Customer Perceived Value is basically the difference between
total customer value and total customer cost.
Dalda Foods maintain strong customer relations as they offer the best in quality and price and
provide best value and satisfaction to their customers by providing the best cash and credit
policies. They provide a product corresponding to each market segment and satisfy them
according to their demands. Surveys are often conducted to identify what the actual needs and
demands of customers are.

Using CRM to Enhance Accounts Receivable


Problem: Slow paying customers can jeopardize your cash flow, and you have no access to sales
forecasting to plan cash flow accurately.
CRM allows salespeople to review a customers credit status before they place new orders, so
orders that cant be fulfilled arent placed.
Flags and alerts enable you to escalate late payment concerns more quickly, shorten AR
collection time and track collection efforts with complete visibility to everyone in the business

Shorter AR time and more cash available for the business


Easier access to order, invoice, payment, balance, and aging information
when contacting customers
Hours saved on the phone with front-office staff and troubleshooting
Fewer issues with late paying customers, since salespeople know a
customers account status before placing new orders
Access to sales forecasting and reports from one system, so you know how
to plan cash flow.

Market Environment
There are basically two factors that can affect an organizations performance in the market it is
operating. These are:

Micro Environmental Factors


Macro Environmental Factors

Micro Environmental Factors


The factors that are close to the company and that affect the ability of a company to serve its
customers. There are six different factors that are generally treated as Micro Environmental
Factors. These are

The Company
Suppliers
Intermediaries
Competitors
Consumer Markets
Public

The Company
As it is mentioned in the history portion that Dalda Foods was basically a project of unilever but
it but unilever decided to sale out this brand to Dalda Foods. At that time it was a project of 4
billion rupees. It were the devotion and the company policies that held this brand alive in the
market and during 4 years span of time the company progressed and now it is a 31 billion project
and also the second largest brand of Pakistan after Nestle.

Intermediaries
Company does its marketing itself. The products advertisement is done through an
advertisement firm Makan Ericson. But this advertisement is just for promotional purpose
because the company is well established and also its not in introductory stages.
For the product containment the company involves physical distribution firms or handling
distributors. In Multan region Aaqib Bros. is working as handling distributors and provides
transportation and warehouse to supply goods to resellers of Multan region.
This factor helps out the company to provide goods to final consumers in a more efficient and
organized manner.

Suppliers
In micro environmental factors we take those suppliers into account that provide raw material for
the product. In case of Dalda Banaspati ghee the raw material is Palm Oil that is being

transported from Malaysia. Another raw material is the tins in which the final product is
contained. It is also outsourced.
Palm Oil is imported through shipments and the premium brands of this industry like Habeeb
and other brands are also involved in this import and other small brands purchase the raw
material from them. The company policy is to revise the rates after every three months if it is
needed. If the price of raw palm oil decreases in the international market and suppliers decrease
the price but the company has the stock of the product that was purchased at high rates then it
will create a problem. In this case company handles it by maintaining the prices for as long as
they can and then gradually decrease them.
Supplies are always available in time and increase the availability of the product in the market.

Competitors
There are basically two types of competitors good and bad. Good competitors are those that
dont spoil the market. They make work in collaboration of others. For example if they have to
increase the rates they take decision with the other premium brands so they dont spoil the
market of other brand. Dalda is one of those competitors.
When we talk about the bad competitors these are the ones that spoil the market. For example the
major competitor of Dalda Banaspati ghee in Multan region is Sultan Banaspati they take such
decisions independently and the retailers take their product more because this earns them more
profit also they dont have sense that Dalda is a premium brand while Sultan is not. Also when
they decrease their rates they take an independent decisions hence spoiling the market of our
product.

Definition of a Receivable
Receivables are assets that represent claims against other entities for goods or services provided,
but for which cash has not been received.
Accounts Receivable is considered valid after:

The buyer of the goods/services has entered into a legally binding agreement
The receivable can be accurately measured

The seller has provided goods or services to the buyer


The payment is due to the seller from the buyer
The payment has not been received from the buyer
The revenue from the transaction has been recorded on the sellers books
There is a reasonable expectation of collection

Account receivables management


Companies must balance speeding up the collection of accounts receivable with the possibility of
gaining customers by issuing credit and implementing easy payment terms. Small businesses
often have restricted access to credit themselves and may have to depend on rapid payment of
outstanding amounts. Company policies define the goals and the framework of the accounts
receivable functions from the point of view of such limitations. Quality issues often lead to late
payments, and the company must consider customer satisfaction in collection procedures.

Managing Invoicing
The first step in implementing an accounts receivable system is developing policies and
procedures for invoicing. A business can speed up collection by issuing invoices as soon as the
sale is complete. Internal policies must detail when the sales department should report sales and
when the accounting department should issue the invoice. Procedures detail what the sales report
must include, how to prepare it and where to send it. Accounting procedures give the details of
invoice preparation, verification, data entry into the accounting software and invoice mailing.
Credit period of customers start from the date of invoices submitted and stocks received by the
customers. These customers are managed by modern trade, PMG and Key Account managers.
MT and KA payment details along with the bank voucher and pay in slips are sent to head office
to reconcile these accounts. If any deduction is made against payment invoice, regions are
supposed to give complete details against deductions. It could be against CR notes, claims, short
supply etc.
Ageing and outstanding status is checked and disseminated to all concerned regions and sales
staff on daily basis to recover the pending amount.

Managing Credit
Unless customers always pay in advance, they typically receive credit, at least until they pay
their bills. Customers that receive credit must have accounts for which the company has
performed a credit check and which it monitors for prompt payment. Company policies specify
which customers can open accounts, what kind of credit approval process to apply and the
required credit standards. Procedures detail the account information required from customers,
who carries out the credit check and how. Account maintenance procedures give details on
tracking payment performance and how to suspend credit when required.

Collecting Receivables
The final step in the operation of an accounts receivable system is collecting the amounts due as
rapidly as possible. If a company operates in an industry where payment in 30 days is the
standard, it can offer discounts or incentives for earlier payment. Regular reminders to customers
with overdue accounts are an effective tool. Policies specify the standard payment terms, any
discounts and a schedule for reminders as well as consequences for late payment. Collection
procedures detail tracking payments, entering receipts into the accounting system, sending
reminders for late payments and initiating additional collection actions.

Process of Accounts Receivable at

There are mainly 4 steps performed at Dalda for the processing of


Accounts receivable, it is done both electronically and manually.

1. Set up an account for each customer they have using normal


bookkeeping system.
Dalda use a Microsoft Excel spreadsheet for small bookkeeping needs. For every new
customer the following steps are being taken:
o Capture their business name and that of their bookkeeping contact person, address,
telephone and fax numbers.
o Add them to computerized system, giving the new account a name or number
identification.
o Every time there is another sale to this customer, add it to his or her record.
o Maintain a manual filing system with paper-copied information

2. Run a report from accounting software of people who have outstanding


accounts over the past 30 days for monthly billing purposes.
o

In this they Use only those accounts receivable who owe something to Dalda. Send
these customers a bill listing the transaction, including the date of purchase, amount still
owed, service and shipping charges and any applicable taxes.

o Each invoice must show penalties applicable for not paying in full by the listed due date.
This is where we discuss late charges.
o Past due accounts also need to be included in this report. List the original date of
purchase or services rendered and how many days the account is past due (such as 30, 60,
90 and 120 or more days).

3. Post payments to the accounts as they come in, giving credit to


the appropriate company within electronic and paper files
A payment entry ensures that the customer has been given credit for payments made.

4. Maintaining a policy as to if/when we will send extremely pastdue accounts to a collection agency or call it bad debt

Debts will fall off as uncollectible at some point and should be archived or removed in
some way so there will be plenty of room in our accounting system for the ongoing
accounts.

Balance Check of Receivables


Sales orders given to depots along with the detail of DD/online deposits for only advance
customers. Pay in slips are circulated in depots and Sales accounts by the region after depositing
in to the bank. After feeding all payments into Scala, customers balances are disseminated to all
depots and regions by sales accounts. Depots and regions consider the balances to dispatch the
orders accordingly.

Debit Balances may arise due to;


1.
2.
3.
4.

Delay in entering payments detail in Scala


Short payments
Dishonored cheques
Stocks supplied more than Advance payment

Bank send the details of dishonored cheques/SIDS on daily basis to sales account and is entered
into scala and customers accounts is debited and freezed for further supplies till the amount of
bounced cheque/SIDA is circulated to all concerned depots, regions and line directors on daily
basis, sale accounts ask regions to get the amount realized from customers against bounced
cheques/SIDA.
If cheque/SIDA of any customer is bounced, he will pay 0.5percent penalty charges to WIL his
cheque faculty is stopped and brought on advance payment system. In special cases customer
converted to advance system are brought back on cheque/SIDA system on request of DB and
region with permission of NSM.

Credit policy
This refers to guidelines that are followed in managing credit at DALDA. Credit policy includes
credit standards, credit terms and collection procedures. Credit sales are a function of total sales;
total sales depend on such factors as the economic conditions e.t.c credit sales are also influenced
by the nature of the business and industrial norms. All these factors are to a very large extent
uncontrolled by a financial manger. The only way credit sales can be controlled is by making
alterations in the firms credit policy. A firm therefore requires credit policy in its operations
since a proportionately large amount of sales are made on credit and credit policy variables are
the ones in the control of DALDAs manger.

Lenient credit policy


This policy tends to give credit to customers on very liberal terms and standards. Credit is
granted for period of time even to those customers whose credit worthiness is not fully known or
whose financial position is doubtful. Credit is granted at high discount rates.
Default customers who were converted to advance system are brought back on cheque/SIDA
system on request of DB and region with permission of NSM.

Stringent credit policy


A stringent credit policy gives credit on highly selective basis only to customers whose credit
worthiness has been ascertained and is financially strong. Credit periods are shorter and
discounts are lower. It involves low costs but may be detrimental to sales returns. A firm needs
to formulate a credit policy which is optimum.
Default customers accounts are debited and freezed for further supplies till the amount of
bounced cheque/SIDA is circulated to all concerned depots, regions and line directors on daily
basis, sale accounts ask regions to get the amount realized from customers against bounced
cheques/SIDA.

If cheque/SIDA of any customer is bounced, he will pay 0.5percent penalty charges to WIL his
cheque faculty is stopped and brought on advance payment system

Credit standards
DALDAs credit standards focus on the person who wants credit and thus determines who
qualifies for the credit. Credit standards are the criteria, which the firm follows in selection of
customers for credit extension. In order to analyze customers and set credit standards, the firm
should consider the average collection period (ACP) and the default rate. Average collection
period is the period in which the debts remain outstanding. On the other hand, default rate is the
rate of uncollected receivables to total receivables. From the default ratio, the firm is able to
determine that the customer will not meet his credit obligation.

Credit terms
These are stipulations under which DALDA grants credit to customers. Credit terms are more
attractive to act as an incentive to clients without incurring high level of bad debt losses. Thus
the terms offered should confirm to the average industrial terms.
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Collection procedures
DALDAs efforts in order to accelerate collections from slow paying customers and to reduce bad
debt losses. Collection procedures include sending reminders, use of litigation, insuring debtors,
e.t.c.

Mode of Collections;
1.
2.
3.
4.

Cheques and SIDA slips prepared and deposited into banks by sales accounting
DDs/Pos deposited into banks by regions
Online deposits by DBs at their own
Online funds transfer OFT by DBs from their desktop

All the cheques/DDs/SIDA slips are checked and matched before depositing into banks to check
the discrepancies. All the remittances are sent by courier rider. Banks provide knowledge pay in
slips deposited by sales account and regions. Knowledge copy is kept in record of sales account.
Online payments are also deposited in banks directly by customers and cash payment voucher is
provided to concerned sales regions by the customers. Sales region also sends online payment
sheets to ales account to check that payment. have been credited in to company account, same
are entered into customers ledger.

After receiving all remittances, bank sends the following reports on daily
basis;
1.
2.
3.
4.
5.

Realization Report
Returned Report
Outstanding CIP report
Bank Charges Report
Bank Statement.

Bank Collection and Reconciliation;

Strong collection system and bank reconciliation is very important in DALDA as it provides
confirmation that the company funds deposited into banks are credited into company accounts
and cheques issued are correctly paid from company funds. Errors and mistakes are highlighted
only after reconciliation of bank accounts. Timely conducting the reconciliation is a must at
DALDA.

Receivable Questionnaire

Internal Control Questionnaire:


For the purpose of internal control, there is a receivable questionnaire used at Dalda by
the accounts receivable department.

Other remarks concerning the evaluation of internal control for the receivable cycle:
* Question was designed to help identify risk factors that could result in errors, fraud,
irregularities and/or illegal acts. When the question is answered NO, the risk factor
identified should be considered when analyzing the departments operations, and the
completed questionnaire should be forwarded to Financial Controls.

Recommendations for improving accounts receivable


management at Dalda:
1. Optimize Cash Sales to Avoid Risk
There is no credit risk in cash. Dalda allows for both cash payments and invoices, so they should
optimize the amount of cash, as a percentage of total sales, to the highest level possible for their
industry or commercial sector.

2. Get Deposits Wherever Possible


Larger sales orders, produce-to-order manufacturing and, in particular, custom orders should
require a deposit of 10-50% of the final purchase price at order time. This will go a long way to
alleviating cash flow shortages and to also assuring the customers commitment to the order.
Deposits of this nature should be non-refundable.

3. Suggest Credit Cards to Secure Payment


Dalda should have the capability to accept major credit cards (Visa, MasterCard, America
Express and Discover). This is the next best thing to cash and reduces payment risk. In many
instances, it
also makes it easier for a customer to order. Customers who object to paying ahead of time may
be satisfied by placing a hold on their credit card for the amount of the sale and processing the
payment only after shipping the product or completing the service. This guarantees payment
(for a period, usually 30 days) yet doesnt appear as an early payment to the customer.

4. Require Progress Payments for Work-in-Progress Orders or


Contract Sales
include in their sales contract specific times when payments are due (for example: 10% at time of
order, 40% at 60 days, balance at completion). This will go a long way to avoid cash tightness
and provide funds for continuing the project. In many contract sales situations, the amount of the
deposit is effectively the profit on the order and is obtained upfront; the balance or cost of the
product is then transferred from customer to vendor at normal payment terms.

5. Develop and Use a Credit Application Form


Every business, large or small that engages in invoiced sales should have a credit application.
This can be as simple as a one page, faxable form giving critical information such as name and
telephone number of the customers accounts payable contact, department head and chief
executive. The form should also require a minimum of two trade references and a bank reference.
A key administrative person (in smaller businesses this is usually the Office Manager) is
delegated responsibility for obtaining the information on the form, verifying the references and
suggesting a credit limit based on the findings.

6. Set a Credit Limit for Every Customer, Large or Small


After credit references have been checked, a credit limit should be set for every customer. For
small customers, the credit limit should be set based on their mid-level to maximum
demonstrated payment performance. For large companies, a credit limit should be set based on
the amount of risk company is willing to accept and is a direct reflection of the percentage of
business. you are willing to devote to one customer. Typically, concentrating over 10% of your
business in one customer begins to be a risk; 30-50% is very risky and over 50% is potential
disaster for your company. Bad things can happen to large companies as well.

7. Monitor Receivables Aging by Total and By Customer


At least weekly, calculate the average age of your outstanding invoices by customer and total.
Assign responsibility (for example, the Office Manager) for generating and reporting on this
information. Develop an Overdue report that shows every invoice 5 days or more past
terms. Set specific, reasonable goals based on their industry for Average Days Receivables and
tie one component of your Office Managers compensation package to achieving the goal.

8. Develop Standardized Action Procedures for Overdue Invoices


Develop a formal, written collection procedure including scripts or guidelines to be used when
contacting customers who have outstanding, overdue invoices. The approach taken is always
courteous but increasingly firm as the overdue time increases. Typically, the first call is a
courtesy inquiry only. At 60 days they may be reminded of the companys terms and at their
credit is in danger, at 90 days that their account is will revert to C.O.D. and at 100 days that
litigation may proceed unless payment is received immediately. If the last stage is reached, you
should be prepared to follow through promptly.

9. Avoid Early Dunning Letters and Use the Telephone


Dunning letters, overdue notices and account statements that indicate an overdue invoice usually
do nothing but irritate a responsible customer who may have a reasonable explanation for a slow
payment. Instead, it is preferable to have your person responsible for accounts receivable
telephone the customers accounts payable designee (found on the credit application) to ask if the
invoice has been misplaced or there is any other problem. Typically, 80% of slow payments are
resolved in this manner and a rapport is created between key personnel at both companies.

10. Use Discount Payment Terms Wisely, If At All


Offering an early payment discount does not always produce the desired result. If your
customers problem is cash flow, they will be unable to take the discount. Often, customers who
already pay on time will take advantage of the discount. You may properly rationalize this as an
award to good customers but youve just reduced your overall profitability as a result. Discounts
that are attractive to customers most often do not produce a favorable offset in the time-value of
money to your company. Better to poll your slow pay customers first and individually, to
determine what the potential value of discounting might be to your cash flow.

11. Use Your Accounting System to Help Manage Credit and


Accounts Receivable
Many small businesses use simplified accounting systems such as QuickBooks or Peachtree
and these systems are capable of reducing the amount of time required for accounts receivable
management. Credit limits can be set by customer and the system will provide a warning
message on entry of a new order should that order cause the limit to be exceeded. Aging reports
by customer can be generated in a variety of formats. Data can be exported directly to an Excel
spreadsheet and further analyzed if desired. Invoice data can also be directly exported to a
customer via fax or email saving considerable time. Current customer contacts and telephone
numbers are included in customer records and can be quickly extracted and used in screen
reports to aid in collection calls. Be sure you are using all the features of your accounting system
to help your effort in managing credit and accounts receivable.

12. Use a designed software for accounts receivable management


The company can use software especially designed for accounts receivable management for
instance SAP This scenario deals with posting accounting data for customers in Accounts
Receivable. it save chances of error and saves time, by the help of SAP All postings in
Accounts Receivable are also recorded directly in the General Ledger. The payment program can
automatically carry out direct debiting and down payments. When you post data in Accounts
Receivable, the system creates a document and passes the data entered to the general ledger.
General ledger (Profit and Loss) accounts and customer accounts are then updated according to
the transaction concerned (receivable, down payment, credit memo and so on) customer payment
activities. All business transactions are posted to and managed by means of accounts and for this
customer master records are created. One time Customers are used for avoiding building up of
huge master data volume.

Process Flow Diagram of SAP