Order Out of Chaos

In February of 2000, I answered an advertisement for a company which sells and leases office equipment, especially fax machines and copiers. The initial interview with the company owner went well, and I was offered the role of AR Manager. What made the job especially chalenging, was that while the company had been in business for over twenty years, there had never been a formal Accounts Receivable department, no standardized credit policy, and delinquent accounts from some customers ran back for years. Worse, source documents were not organized and there had never been an internal audit to test any of the procedures which were in place. I had to build the department from scratch.

I created a triage of sorts, first finding and filing contracts, bills of lading, and files on the major customers in default or delinquency beyond 180 days. Later, I expanded those files to address customers who were 90 days past due, then eventually all 30 dpd customers. I considered and wrote up credit policies for new customers, including the criteria for waiving security and hwo to determine credit limits.

The bad debt situation was truly scary. I hired two AR clerks to work on collections, and personally addressed delinquency on accounts which had the largest balance or the greatest length of default.

The company eventually decided to roll AR Management back under Sales and Marketing, but in six months I reduced outstanding AR by sixty percent, created a comprehensive and user-friendly system of credit policy and docuemnt security, and developed effective internal controls where none had existed before.