What should be included in a receivables policy?

Including credit terms and collection processes in a receivables policy is essential for setting clear expectations regarding payment terms with customers and the steps that will be taken when payments are overdue. Credit terms outline the conditions under which credit is extended, such as the length of the payment period and any discounts for early payment. Collection processes detail the actions taken to remind customers of overdue payments, how disputes will be managed, and the procedures followed if payment is not received, including escalation steps.

This clarity helps mitigate the risk of late payments, improves cash flow, and ensures that all staff involved in accounts receivable understand their roles and responsibilities. It also provides a framework for communicating with customers regarding their obligations, fostering better relationships and compliance with payment schedules.

In contrast, the other options are not relevant to a receivables policy. Employee benefits and hires pertain to human resources rather than accounts receivable management. Product features and specifications fall under product management, and advertising strategies relate to marketing, neither of which impacts how receivables are managed.