Account Receivables Management refers to the set of policies, procedures, and practices employed by a company with respect to managing sales offered on credit.
It encompasses the evaluation of client credit worthiness and risk, establishing sales terms and credit policies, and designing an appropriate receivables collection process.
Accounts receivables are found on the balance sheet of a company, and are considered a short-term Asset.
They are the one of the backbones of sales-generation, and thus must be managed to ensure they are eventually translated into cash-flows.
A company that fails to efficiently convert its receivables into cash can find itself in a poor liquidity position, crippling its working capital and facing unpleasant operational difficulties.
Debt management collection agencies play an active role in the collection of outstanding or overdue payments. Outsourcing the services of collection agencies ,as is the practice with banks, helps in monitoring the receivables closely as the agency uses its resources of trained manpower to investigate and pursue the payments.