Management of Accounts Receivable
December 1997

Contents
Preface
Introduction The Accounts Receivable Process Re-Engineering Accounts Receivable Risk Management Use of Advanced Technology Debt Collection Processes Performance Measurement Appendix

Preface
This guide accompanies the Auditor-General’s Audit Report No. 29, Management of Accounts Receivable in the Commonwealth. It is intended to provide an overview of the current trends and "better practice" approaches that are being adopted by organisations in managing accounts receivable. In the commercial world the way in which organisations manage their accounts receivable has significant implications for the financial health of those organisations. This creates an imperative to ensure the management of receivables is both efficient and effective. The practices used in common business processes such as accounts receivable management have universal application and are not industry specific. In this regard there are lessons to be learned by others from the practices followed by organisations for whom accounts receivable is a core business process. The better practices discussed in this guide are therefore recommended for consideration by Commonwealth government agencies. Not all of the practices outlined in this guide will suit each agency’s circumstances, however, it is considered that most agencies, which derive revenue on sale of goods and services on credit terms, will benefit from benchmarking their current practices against those detailed in the guide.

Introduction Effective management of accounts receivable presents important opportunities for agencies to achieve strategic advantage through improvements in customer service, cash management and reductions in costs. The primary objective of accounts receivable in the Commonwealth public sector is to collect monies due and to assist in meeting cash