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• Ensure credit and collection policies are in writing. • Conduct credit checks on new credit customers. • Regularly age accounts and have an independent review of the report. • Ensure credit purchases are recorded as soon as the transaction occurs. • Separate the accounts receivable function and cash receipting. • Have transactions, such as non-cash credits and write-off of bad debts, cross-checked. • Have a well-documented and strict policy for the follow up of overdue accounts. • Review credit balances on a regular basis. • Have numerical or batch-processing controls over billing. • Ensure cross-checking of early payment discounts and penalties on overdue accounts. • Ensure mailing of accounts cannot be tampered with. • Prepare trial balance of individual accounts receivable regularly. • Reconcile trial balances with general ledger control accounts.
(1)establishing the charges to the receivables accounts, (2) recording cash receipts and preparing the deposits, and (3) approval of any adjustments or write-off to any receivable accounts.
Evaluation of the customers' credibility before accepting any credit sales and regular follow up for the receivables.
The maintenance of the receivable accounts and related subsidiary ledgers should be separated, wherever practicable,, from the functionsof 1. Establishing the charges to the receivables accounts,2. Recording cash receipts and preparing the deposits. and3.. Approval of any adjustments or write-off to any receivable accounts…
Controls over accounts receivable really begin with the initial creation of a customer invoice, since you must minimize several issues during the creation of accounts receivable before you can have a comprehensive set of controls over this key asset. Controls then span the proper maintenance of accounts receivable, and their elimination through either payments from customers or the generation of credit memos
