Credit and Collections - Consistent Frozen Solutions has sent a JOB OFFER!!!! THANK YOU, LORD!!

The Credit and Collection Cycle (8)

1. Customer purchases on credit

2. Company issues Sales Invoice

3. Customer receives payment terms (e.g., Net 30)

4. Accounts Receivable is recorded

5. Collection team monitors due dates

6. Customer pays

7. Payment is posted

8. Account is cleared

Know where a Collection Staff fits: (6) MFRCUE

• Monitor customer accounts

• Follow up overdue invoices

• Record payments

• Coordinate with customers

• Update aging reports

• Escalate difficult accounts

Basic Accounts Receivable (AR)

Money owed by customers who bought on credit.

Journal Entry

Debit   Accounts Receivable   20,000

Credit  Sales Revenue         20,000

After customer pays

Debit   Cash                  20,000

Credit  Accounts Receivable   20,000

Credit Terms

Net 30

Customer must pay within 30 days.

2/10, Net 30

Customer gets a 2% discount if they pay within 10 days.

Otherwise,
full payment is due within 30 days.

Due Date

Know how to determine it.

Invoice Date

July 1

Terms

Net 30

Due Date

July 31

If payment is made August 5

It is already overdue.

Outstanding Balance

Amount customer still owes.

Example

Invoice

₱50,000

Customer pays

₱20,000

Outstanding Balance

Overdue Account

Invoice that has passed its due date.

Example

Due

July 10

Today

July 15

Status

Overdue by 5 days.

Delinquent Account

An account that remains unpaid for a long period or repeatedly misses payments.

More serious than simply overdue.

Aging Report; Purpose (3) PIM

An aging report groups unpaid invoices according to how late they are.

Example

Customer	Balance	Age
ABC	₱20,000	Current
XYZ	₱15,000	1–30 Days
DEF	₱50,000	31–60 Days
GHI	₱75,000	61–90 Days

Purpose

• Prioritize follow-ups

• Identify risky accounts

• Monitor overdue receivables

Collection Follow-up Process (8) IRDFSCEP

1. Invoice sent

2. Reminder before due date

3. Due date arrives

4. Follow-up call/email

5. Second reminder

6. Collection letter

7. Escalation

8. Possible legal action/write-off

Collection Communication: 3 PPR

Know how to communicate professionally.

Instead of

"Why haven't you paid?"

Say

"Good morning. We'd like to follow up regarding Invoice #12345, which became due on July 5. May we know the status of your payment?"

Remain

• polite

• professional

• respectful

Reasons Customers Don't Pay (7) IWMWCDC; The job is to what? (4) ICDF

Hiring managers often ask this.

Common reasons

• Invoice not received

• Wrong billing

• Missing Purchase Order

• Waiting for approval

• Cash flow problems

• Dispute regarding goods

• Check still being processed

Your job is to

• investigate

• coordinate

• document

• follow up

Payment Posting (6) CVMRUI

1. Customer pays

2. Verify amount

3. Match payment to invoice

4. Record payment

5. Update customer balance

6. Issue receipt if needed

Short Payment

Customer pays less than invoice.

Example

Invoice

₱10,000

Customer pays

₱9,700

Difference

₱300

Never assume why.

Investigate first.

Partial Payment

Customer pays only part of the invoice.

Invoice

₱50,000

Paid

₱30,000

Remaining

₱20,000

Record the payment and continue monitoring the remaining balance.

Credit Memo vs Debit Memo

Credit Memo

Reduces customer's balance.

Reasons

• Returned goods

• Discount

• Billing error

Debit Memo

Increases customer's balance.

Reasons

• Underbilling

• Additional charges

Collection Documents (6) SSOPDP

1. Sales Invoice - Proof of sale.

2. Statement of Account (SOA) - Shows all unpaid balances.

3. Official Receipt - Proof of payment.

4. Purchase Order - Customer's order document.

5. Delivery Receipt - Proof goods were delivered.

6. Proof of Payment - Bank transfer, check, deposit slip, etc.

Basic Excel Skills (7)

• Sort

• Filter

• SUM

• IF

• VLOOKUP/XLOOKUP

• Conditional Formatting

• Remove Duplicates

• Pivot Table (basic)

Common Collection KPIs (4) CDOA

• Collection Rate – Percentage of receivables collected within a period.

• Collection Rate=(Amount Collected / Total Amount Due)×100%

• Days Sales Outstanding (DSO) – Average number of days it takes to collect payment after a sale.

DSO= (Average Accounts Receivable​ / Net Credit Sales) × Number of Days

Where: Average Accounts Receivable

= (Beginning AR + Ending AR) / 2

• Overdue Accounts – Number or value of accounts past their due date.

• Aging Distribution – Breakdown of receivables by age (e.g., Current, 1–30 days, 31–60 days). Age of Invoice=Current Date−Due Date

Basic Accounting Knowledge

• Debit and credit rules

• Journal entries for credit sales and collections

• Accounts Receivable

• Cash

• Sales Revenue

• Bad Debts (basic concept)

• Accrual accounting

• Bank reconciliation

• Source documents

Customer Refunds

A refund is money returned to a customer.
Example:

Customer accidentally paid twice.

Invoice

₱10,000

Customer paid

₱20,000

The company processes a refund for the excess ₱10,000.

As Collection Staff, you typically:

• verify the overpayment,

• prepare or process the refund request,

• ensure the refund is properly documented.

Account Adjustments (5) PDRAW

An account adjustment is any correction made to a customer's balance.

Examples include:

• pricing errors,

• duplicate invoices,

• returned goods,

• approved discounts,

• waived charges.

Example:

Original invoice

₱15,000

Approved discount

₱1,000

Adjusted balance

₱14,000

Always ensure adjustments are authorized before processing.

Customer Reconciliation

This means comparing your company's Accounts Receivable records with the customer's records to ensure they agree.

Example:

Company records:

Invoice	Amount
INV001	₱10,000
INV002	₱15,000

Customer records:

Invoice	Amount
INV001	₱10,000

The customer says they never received INV002.

Your role:

• verify company records,

• check supporting documents,

• coordinate with Sales or Billing if needed,

• resolve the discrepancy.

Interview question:

What would you do if a customer claims they already paid?

Good answer:

I would first verify the payment in our system, review the proof of payment, compare it with our records, coordinate with the accounting or treasury team if necessary, and update the customer's account once the payment is confirmed.

Small Balance Write-Off

Sometimes a very small unpaid amount costs more to collect than it is worth.

Example:

Outstanding balance

₱8

Instead of repeatedly contacting the customer, management may approve writing it off.

Important:

Collection Staff does not decide to write off balances. You prepare documentation and follow company approval procedures.

Negotiation Skills

You don't need to be an expert negotiator.

A hiring manager wants to know that you can communicate respectfully.

Example:

Customer:

I can't pay today.

Good response:

Thank you for letting us know. May I ask when you expect to make the payment? We'll update our records accordingly.

This shows professionalism while still working toward collection.

Interdepartmental Coordination

The job description mentions coordinating with Sales.

Example:

Customer says:

We haven't received all the products.

Instead of insisting on payment, you:

• verify the issue,

• contact Sales or Logistics,

• document the concern,

• follow up after the issue is resolved.

Hiring managers value teamwork and proper escalation.

Documentation

Collection staff document every interaction.

Example notes:

• July 12 – Called customer; no answer.

• July 13 – Customer promised payment on July 15.

• July 15 – Payment received.

• July 16 – Account updated.

Good documentation helps everyone stay informed and supports accurate reporting.

Prioritizing Accounts (4)

If you have multiple overdue accounts, you should prioritize based on factors such as:

• how long the account has been overdue,

• the outstanding amount,

• customer payment history,

• company collection policies.

This demonstrates sound judgment and time management.

Customer Service Mindset (5)

A common misconception is that collections are about demanding payment.

In reality, they're about:

• listening,

• identifying the reason for non-payment,

• helping resolve issues,

• maintaining a positive customer relationship,

• collecting payment professionally.

what you would do before concluding that the customer has not paid? (8) RCRVCIUI

1. Review the customer's account in the AR ledger.

2. Check whether the payment has already been posted.

3. Review the Official Receipt or payment record.

4. Verify the deposit slip, bank transfer, cheque, or proof of payment.

5. Coordinate with Treasury/Cashiering if the payment has not yet been recorded.

6. If necessary, ask the customer to send proof of payment.

7. Update the records if payment is confirmed.

8. If payment cannot be verified, explain the findings professionally and discuss the next steps.