Attention to detail is of the utmost importance in the A/R function. The accuracy of records is extremely important, and interviewers need to hear that you have these skills. Describe specific situations and how you acted in this situation.
"Yes of course. I have had an eye for detail since childhood. Perhaps, that is why I did exceptionally well in my last job as inventory clerk. I had the lowest rebound percentage in my department and was the newest team member. At the end of the month, inventory was counted by two people and department goals were set for the person that had the highest success rate for counting inventory and was rewarded with a free lunch. I had worked in the department for 8 months and had the highest monthly inventory success rate for the last 3 months. I took my time and was thorough by counting the inventory twice."
"At my current job the business was getting a lot of complaints about late deliveries I met with the staff involved in the customer delivery department and discovered that the problem seemed to be with the stock coming through on time. I investigated and found that requests for new inventory were not processed in a timely manner. The backlog was in the orders department as they were not following up adequately with the suppliers. A system for regular follow-up was quickly implemented. This sorted out the stock problems and the delivery staff were able to meet their deadlines."
This may sound like a silly question, but the interviewer wants to ensure you understand the importance of brining in the cash. Accounts Receivable are the amounts owed to a company by its customers and/or employees. Money owed by a business enterprise for merchandise bought on an open account. It is also called 'A/R' or just 'Receivables'.
"Accounts Receivable is money owed to a business for purchases or services obtained on credit. It's the departments responsibility to collect the cash for the company. "
"The Accounts Receivable Department is a major vessel within the company because it establishes the customer credit line and chases the cash flow. The A/R Department is always a huge focus within a company and for the soul purpose that "cash is king". When a company is evaluating growth, sales forecast, and current cash on hand; the A/R department is the focal pint. "
Selling the rights to the amounts owing by debtors to a finance company for an agreed amount (which is less than the figure at which they are recorded in the accounting books because the finance company needs to be paid for providing the service).
"Factoring is simply the selling of accounts receivable to a company that specializes in buying receivables at a discount. Companies choose factoring if they want to receive cash quickly rather than waiting for the duration of the credit terms."
"Factoring is a transaction in which a business sells its invoices, or receivables, to a third-party financial company known as a 'factor. The factor then collects payments on those invoices from the business's customers. Factoring is known in some industries as 'accounts receivable financing.' The main reason that companies choose to factor is that they want to receive cash quickly on their receivables, rather than waiting the 30 to 60 days it often takes a customer to pay. Factoring allows companies to quickly build up their cash flow, which makes it easier for them to pay employees, handle customer orders and add more business."
The aging report is the primary tool used by collections personnel to determine which invoices are overdue for payment. Given its use as a collection tool, the report may be configured to also contain contact information for each customer. The report is also used by management, to determine the effectiveness of the credit and collection functions. A typical aging report lists invoices in 30-day 'buckets,' where the columns contain the following information: The left-most column contains all invoices that are 30 days old or less The next column contains invoices that are 31-60 days old The next column contains invoices that are 61-90 days old The final column contains all older invoices
"The Importance of the Accounts Receivable Aging Report The Accounts Receivable Aging report is a critical tool for managing your business. Most factoring companies request an A/R Aging Report as part of their application package because it gives them a good idea of your receivables portfolio. Surprisingly, a number of companies do not have this valuable report available - a sure indication that they are not using it. This article helps you understand the A/R Aging Report and why factoring companies ask for it."
"An account receivable aging report is especially helpful for enterprises that are known for extending credit to their customers. If customers frequently fail to repay their credit obligations, it may be necessary to reduce the amount of credit that the business offers or change the terms. The report is also valuable because it can show you who your worst debtors are at the moment. It may be necessary to retain the services of an outside collection agency or even consider legal action if you are in a situation where former customers are refusing to settle their accounts. Small businesses can lose thousands or even millions of dollars each year if they are unaware of the aging of their accounts receivable. In some cases, debts may go unpaid for years without any negative consequences for the debtor or action on the part of the aggrieved business. Luckily, Ignite Spot can help you by developing the clear, actionable reports that you need. When you began your business, the intricacies involved in generating an accounts receivable aging report might not have occurred to you. As your small business grows, however, these and other reports will become increasingly important in ensuring your business has a sound financial foundation. An additional use of the aging report is by the credit department, which can view the current payment status of any outstanding invoices to see if customer credit limits should be changed. This is not an ideal use of the report, since the credit department should also review invoices that have already been paid in the recent past. Nonetheless, the report does give a good indication of the near-term financial situation of customers."
Issues that most Accounts Receivable Departments face are: 1. Customers unable to pay 2. Being properly trained to make collection calls or set up payment plans with customers 3. Accounting for bad debt 4. Inaccurate invoice 5. Customer short pays
"The current issues that my A/R department experiences are Invoice discrepancies, dissatisfaction with the goods or services, customer changing invoice terms as per agreed upon, and lack of proper follow up resulting in high bad debts. "
"Some issues that I find almost all Accounts Recievable departments face are the slow paying customers, short payments from customers without any communication, customers communicate dissatisfaction for the product /service after the invoice has aged over 30 days, and many A/R Specialists do not have proper training in collecting of aged payables. "
This is a very straightforward question that can be answered via experience or academic knowledge. These types of questions can be one can easily get stuck on it. Do not overthink the answer and think of the of process.
"When a customer payment is received the payment will need to be applied against the open invoice/s and properly posted to the GL. Then the cash will need to be recognized as well. "
"Depending upon how the customer payment was received; prepayment or final payment, will determine the next steps. Let's assume that service or widget has been received. If the customer payment is cash, check, ACH, or wire then it needs to be appropriately applied to customer outstanding invoice/s. Once this has been done, then recognize the cash deposit in the cash account."
For this example, give a brief explanation of the definition and an examples of deferred revenue expenditure. Deferred revenue expenditure is an expenditure and the benefit of which will be realized over a period. Example, an Advertisement expenditure incurred by the company for promoting the product. The benefits of this huge expenditure will be realized over the period and not in the same period when it occurred.
"Upon delivery of the goods or services to the customer, the deferred revenue is reclassified as an asset. An example of deferred revenue expenditure is when a cleaning company accepts the prepayment of its monthly fee for its services in advance for a whole year. ... In each of these cases, the payment is treated as deferred revenues. Deferred Revenue is that revenue which is received in advance but against it either sale is yet to be made or service is yet to be rendered. Such revenue is considered as a liability. It is considered as income only when goods or services have been delivered or rendered. The deferred revenue is also called as unearned revenue or income received in advance. The adjusting entry for deferred revenue is as follows examples are the advance payment for goods and services like in the maitenance contracts examples are the advance payment for goods and services like in the maitenance contracts "
"Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived from a number of following accounting periods. These expenses are unusually large in amount and, essentially, the benefits are not consumed within the same accounting period. Part of the amount which is charged to profit and loss account in the current accounting period is reduced from total expenditure and rest is shown in the balance sheet as an asset (fictitious asset, i.e. it is not really an asset). An example is when a company is introducing a new product to the market and decides to spend a large amount on its advertising in the current accounting period. This marketing spend is supposed to draw benefits beyond the current accounting period, hence, it is a better idea not to charge the entire amount in the current year's P&L Account and spread it over multiple periods."
This question is simply asking you to explain the difference in about 2-3 sentences. Keep the answer clear and concise. Debenture holder are those who provide long term loans at a specific interest rate in terms of cash. A creditor provides only short term credit in terms of cash for producing or purchasing of goods.
"The Debenture holder provides long term finance to the company and gets the fixed interest, even if there is no profit. Additionally, the Debenture Holder gets first preference for the payment when winding up of the company. Creditors provide short term credit for the payment towards services rendered (current liability). Creditors are who provide trading goods as well as raw material to the company on credit for short term. "
"Debenture holders come under the liabilities side of the balance sheet, and they come into picture at the time of raising loans through debentures for the starting up of the company or at the time of expansion. Debenture holders provide the long term loans. Where as the creditors are related with the goods or merchandise. though they also come under the liabilities side of the balance sheet, they come under the current liabilities."
Make sure you understand that all this question is simply asking is if you know how to set up recurring payments. Nothing more. This is another question not to overthink. Most accounting software allow business to setup automatic invoicing or better known as recurring invoicing....Automatic invoicing saves the business time and money.
"How to set up recurring payments will vary in each accounting software, but I have never run into one that can not do this from: QuickBooks, Xero, Sage, etc. If all the basic level accounting software has this feature, almost all other systems will have it as well. This is simply setting up an invoice to occur at a certain time or chosen interval. Once this occurs (depending not the system) it will still need to be emailed or mailed to the customer. "
"Auto-Invoicing allows allows a business to automatically invoice a customer on a regular basis through a recurring setup. This is perfect for customers that are billed on a fixed time basis. There's no fuss with generating the invoice and in some cases sending the invoice to the customer. It's all done automatically and saves time. After setting up a Recurring Profile, you'll need an Auto-Bill-friendly payment gateway enabled. If you haven't enabled a payment gateway before, you can get started here (all gateways except PayPal are Auto-Bill capable). "
Order to Cash, also known as O2C or OTC, refers to the set of business processes for receiving and processing customer sales orders for goods and services and their payment. These processes are at the heart of all businesses and unless they are managed efficiently and accurately, organizations would not only face financial problems, but also reputational issues. Every department in a given company is affected either directly or indirectly by the Order to Cash system.
"Order to cash (OTC or O2C) is a set of business processes that involve receiving and fulfilling customer requests for goods or services. An order to cash cycle consists of multiple processes ore steps including: 1. Customer order is documented 2. Order is fulfilled or service is scheduled 3. Order is shipped to customer or service is performed 4. Invoice is created and sent to customer 5. Customer sends payment /Collection 6. Payment is recorded in general ledger"
"The order to cash process, also known as O2C or OTC, is a set of business processes for receiving and processing customer orders and their payments. Inefficient order management results in high error rates and incorrect shipments at decreased processing speed with the risk of unsatisfied customers. Conventional processing methods do have a lot of manual touch points that will reduce your processing efficiency. In addition, an inefficient bill to cash process due to quote errors, complex customer specific terms, billing inaccuracies and invoicing delays has a negative impact on your cash flow. "
Businesses get orders from customers, send out invoices, receive payments, and deal with correspondence from customers. As in any business credit memos are issued do to defective product, unsatisfactory of services provided, incorrect invoicing, etc. When the original invoice needs to be adjusted to reduce the total customer outstanding balance, this is called a credit memo.
"A credit memo is sent to the customer from the seller. This document is issued to a customer after an invoice is sent out. A credit memo may reduce the price of an item purchased by the customer or eliminate the entire cost of an item. When a seller issues a credit memo, it's put towards the existing balance on a customer's account to reduce the total. A credit memo is different from a refund. A customer who receives a refund for a purchase gets actual money back from the seller. "
"A credit memo is an adjustment in the invoice, reducing the outstanding customer balance. One type of credit memo is issued by a seller in order to reduce the amount that a customer owes from a previously issued sales invoice. For example, assume that Company ABC had issued a sales invoice for $800 for 100 units of product that it shipped to Company XYZ at a price of $8 each. Company XYZ informs Company ABC that one of the units is defective and issues a credit memo for $8. The credit memo will cause the following in Company XYZ accounting records: 1) a debit of $8 to Sales Returns and Allowances, and 2) a credit of $8 to Accounts Receivable. In other words, the credit memo reduced Company ABC net sales and its accounts receivable. When Company XYZ records the credit memo, the following will occur in its accounting records: 1) a debit of $8 to Accounts Payable, and 2) a credit of $8 to Purchases Returns and Allowances (or Inventory)."
Explanation and Journal Entries. Accounts Receivable are the amount of money owed by the customers for goods or services purchased by them on credit. A receivable account can be created by someone who sells goods or services and extends a line of credit to its customers.
"Let us assume that you sold goods worth 10,000 to one of your buyers who is supposed to pay you within 45 days of the day you bill him. Now, you send the customer an invoice for 10,000. In this case, the amount acts as dues to be received and will be booked in your records as accounts receivable. It is similar to the situation where your mobile phone company generates an invoice on the 1st day of a month and gives you 30 days to pay the bill. It is an account receivable for the mobile phone company."
"This requirement to record sales revenue at the time that goods or services are provided means that accounting for sales revenue is slightly more complicated than you may have first guessed. The first transaction, for example, the transaction that records a sale, is shown here.Journal Entry 2 shows a $1,000 debit to cash, which is the $1,000 increase in the cash account that occurs because the customer has just paid you $1,000. Journal Entry 2 also shows a $1,000 credit to accounts receivable. This credit to the accounts receivable asset account reduces the accounts receivable balance. When the business receives payment from the customer for the $1,000 receivable, the business records a journal entry like that shown. Journal Entry 2 shows a $1,000 debit to cash, which is the $1,000 increase in the cash account that occurs because the customer has just paid you $1,000. Journal Entry 2 also shows a $1,000 credit to accounts receivable. This credit to the accounts receivable asset account reduces the accounts receivable balance."
This is a very straightforward question and one that just needs to be answered. This question is testing the interviewees basic A/R knowledge. This is being asked, because if the interviewee cannot answer a basic A/R question, then the interviewer is going to feel the individual is not the most qualified candidate.
"The Industry Standard for an account to be considered delinquent is 90 days past from the due date."
"Always a good question, and one I have been asked quite often in interviews throughout my career. A delinquent account is 90 days of the due date. "
Intercompany transactions are those transactions that take place between two or more entities of the same group of company. So the receivable of one entity would be the payable of another entity.
"Intracompany sales are very common and often occur between larger companies. Recognizing intra-company sales is the same process as recognizing an external sales. "
"I worked for an company that had 126 plants nationwide, and would do business with many of the plants for the purchase of raw materials. The pricing was set at a lower billing price, then external pricing. The revenue recognition was the same as external billing and payment, except with separate accounts. "
A Customer Master Record is a permanent record that contains key information about a business partner or a material. This information must be entered into the system before any transactions can take place involving the business partner customer. The main information required is: bill to address, ship to address (if applicable), sales and use tax exemptions form (if applicable), credit references, Duns and Bradstreet number, establish payment terms, contact information and signed customer contract. If you do not have any experience with maintaining the Customer Master Record then be knowledgeable of the key information requirements.
"The Customer Master Record is originally set up by the salesperson in our company, and then it's maintained by the A/R Specialist. The information that I maintain and change when needed is: New company name, new banking information for payment, new business address, and contacting information. "
"The Customer Master Record is the key information the business requires before engaging in a business transaction. The information normally includes: business ship to and bill to, copy of sales and use tax exemption form, key contact information, etc. Entering all the information about a customer is entered into the system before making transactions insures that subsequent transactions or inquiries will have consistent data, reports, and analyses can be done in an orderly way. All Master Records can be edited or changed when necessary. "
The interviewer is testing your business understanding of the A/R function. There are a few reasons why A/R execution is important. 1. Integrity and ethics of maintaining exceptional business records. 2. Ensuring customers' bills are paid means you are receiving income and being profitable. 3. Having accurate records to know where the company is at financially. 4. Enables easier reporting when the A/R function is exceptional.
"Accounts Receivable is important because it's the are of the business that requires action on my part to turn the debt into cash. Many customers will pay their debts within the expected amount of time, but it's been calculated that the average time it takes a small business owner in the UK to get paid is 71 days."
"This is an excellent question. 'Cash is King' and that is what the A/R department hones in and must focus to collect. A/R is listed as an asset on the balance sheet, but if a customer has not paid and has been extended credit, there is always the chance it can become a liability due to nonpayment. The A/R and Collections area is responsible for collecting the cash flow for the company to pay the expenses and debt. Without the payments to pay the output, I would not have a job."
This is another behavioral interview question. Interviewers want to hear that you are working wisely and not wasting much time during the day. They are paying you to do a job. Think about the ways that you control your time during the day. Do you plan out your day in advance? Do you keep an ongoing to do list? Do you tell people who randomly stop by your office to schedule a time on your calendar to discuss items later? Share 2-3 ways that you manage your time ensuring you are productive each and every day.
"I have found at my last job, that the busier I was, the faster the day went. But when I first started with the company, it was my first job out of college and I felt that my day was always unorganized. I am a very organized individual, but it felt as though I was always jumping from one thing to the next without completing a task. Finally, I asked a co-worker in my department , who did her job exceptionally, if I could shadow her for a day. I did get my manager's approval and in fact, thought it was a very good idea. I sat with her for a full day and did more observing then talking and followup with questions when she was done. This helped me to better understand how to plan my day. The major take-away I do til this day is on Monday morning, I make of list of weekly tasks. "
"Among the most effective ways to improve an accounts receivable is by prioritizing the credit and collections activities. As a Senior A/R Team lead, I take care of businesses most critical activities first, such as the largest outstanding invoices, delinquent accounts, etc. before moving on to your less important activities. This strategy helps to collect more efficiently, get paid faster, and increase cash flow. Unfortunately, without the right tools and processes in place, it can be an extremely time consuming and overwhelming task for A/R departments, which is why my team A/R has established processes and procedures that must be followed to maintain the cash flow and keep DSO down. "
How do you handle your mistakes? The interviewer knows you're not perfect, as you are human. How your self-awareness and how you have learned form your mistakes. Certain topics will help you answer this question more concisely than others. Using a personal conflict, like a disagreement or miscommunication, may take longer to explain without going in depth. Consider sharing about a scheduling issue or arriving late to work. Keep it light and show that you are proactive in clearing up issues that could arise.
"Recently I had a situation where I was giving a presentation to a company and one of the upper managers had to step out during my presentation. He returned after I was done and was taking down my setup, and he asked if he could ask a question, I jokingly replied "no more questions" and then offered, "yes, of course, I would be happy to answer a question for you." Despite the fact that he had laughed at my initial joke, it was clear to me that it had not been received well. I then made certain that I went up to him and apologized and made it clear that I meant no disrespect and that sometimes I just become comfortable with people very quickly. He told me that I needed to be aware of my audience. This is something I have always known, but I believe the sting of this specific event has really brought it to light for me. "
"As a member of the executive board of my fraternity, I was involved in decisions with where to do our community-service projects at times. At one point, the community-service chairman asked me where I thought he should make the next event. I told him we should do an event at the Boys and Girls Club. Some fraternity members complained to the community-service chairman about the decision because they wanted an easier event. I took responsibility for the choice and spoke to the individuals about my reasoning. I told them that I felt the event would make more of a difference in the community than cleaning up a road as we usually do since it would allow us to be mentors to troubled youth as well as provide them with a cleaner building to use. It was better than simply doing manual labor and ended up being a successful event that everyone plans on doing again in the future. "
The interviewer is wanting to know how you handle unordinary situations that pull people out of their comfort zone. Ensure your answer reflects that you are able to stay calm, cool and collective and you follow company procedures. Keep in mind that most customers have great intentions, and odds are, they just made a mistake. Once you have that conversation, you will be able to determine the appropriate next steps.
"This has only happened to me once and I started off with calling the company to learn what happened. I learned that he company paid the invoice with a checking account that was closed due to fraud. The apologized for any inconvenience and send another payment right away. "
"In most cases the business will have a processes and procedures in place to handle this type of scenario. In my experience most managers, normally call the customers manager as well. In all my years of working, I have only had this happened a handful of times and normally there is a logical explanation: fraud, customer had a check bound from someone, used wrong checks from a closed account, stop payment, and also just not enough funds in the bank. "
Negotiating is a common task for A/R Specialists, and the interviewer is trying to learn what amount of experience you have with it. Candidly share your experience. Your response will help the interviewer determine what amount of training you should receive if you are hired for the job. Begin by telling the interviewer if you have negotiated. Discuss what types of deals you have negotiated as well as how often you have conducted negotiations. Next, mention what you liked about the negotiation process, and finish up by discussing one specific example of a negotiation that went really well for you.
"Working in the A/R department, my company gives their employees the opportunity to be flexible with it's customers on a case by case basis if we feel they are unable to make timely payments. This normally does with customers that have an established credit history, and have run into some slow times. I will re-establish temporary payment terms with the customer, upon approval from my direct supervisor and have the customer sign it, so it's in writing. I have always felt this was just apart of my job, and it's necessary. "
"Back in 2011, when many companies were just starting to pull out of the economic slowdown, a turnkey customer had been taking advantage of the company, and I was given this customer account to start managing. Both the Accounting Manager and A/R Team lead left within 2 weeks of each other, leaving a big void in the A/R Department. I was the most senior member in the department, and the President asked me to handle this account which happened to be nearly 50% of the companies business, and he did not want to call customer himself, he avoided any type of confrontation. I thought was very unusual, but I called the owner of the business myself and explained to him that there would not be any further business, until some type of goodwill payment was made. I let him know that nearly 60% of his balance was over aged and payment was needed. The customer called the owner of the my company, and he called me in to have a conference call with the customer. The owner let me do most of the talking and supported my negotiated terms that I had communicated to the customer. Eventually, an ACH payment was made, but not without the customer threatening to leave or find another business. I did not reply, just said that we can always move them to Prepaid terms, instead of granting them credit. The customer asked to keep the current terms. This situation made me very nervous, because I did not know how either business owner was going to react, but I stayed calm and professional. "
This is not a trick question. There are some industries where cash and credit card payments are not accepted and other industries, such as retail and food where this is unheard of. It really is going to depend on the company and industry. Give your opinion based on your experience. If you do not have any real world experience, then give your option and back it up: Example: I believe that technology is moving many companies to a cashless business because...
"In my young experience and generation, I rarely carry or use cash. I mostly use a debit or credit card. This was a case scenario that we studded in my Finance class, and half of the class was divided on this topic. I know of a few well known restaurants in New York that have moved to a cashless policy and the business has spiked, but feel this is more of an isolated case. I believe this scenario is a slow trend that we will be seeing it happening more and more. With that being said, at the same time, cash is an easy target for robbers, and e-transactions are an easy target for hacking and have higher fees for a business. I also see cryptocurreny transactions increasing, because of the very low fees involved. "
"I have worked in 3 different industries; manufacturing, restaurant, and banking. I do not see banks moving to a cashless option any time soon. I do know that many small restaurants are moving to a cashless option, due to the growing concern of having to deposit the cash. This is a risk. All the manufacturing plants I worked in, I had implemented the policy of no petty cash and not cash payments. For one of the business, I implemented a policy of not taking credit cards, either. I did this because each sales invoice was an average sale of $8500 and we were having too many customers dispute the charges. The only forms of acceptable payments were ACH and Wire. Moving to a cashless option is slowing happening. "
Almost everyone people that gets asked this question, will say no. Unless you live or work in California where this is a very common form payment. The point of the interviewer asking this question is to find out if the interviewee is familiar with this payment option, and stay up to date on this A/R topic. The most common form of cryptocurrency is Bitcoin.
"Having two years of Accounts Receivable experience, I have not worked with a company that accepts cryptocurrency as a form of payment. I'm familiar to know what that PayPal is accepting it, and Amazon is still in decisions of weather to accept this currency as payment. There has been a lot of media about Bitcoin, and one I find that many people do not understand. Cryptocurrency values fluctuate and it does not make since to accept in the manufacturing business. Maybe at some point in the future. "
"I'm very familiar with cryptocurrency and it's a very hot topic in the Revenue Recognition area, which impact accounts receivable. Cryptcurrecy is not recognized as revenue on the income statement, when the payment is received. The payment of cryptocurrency is recognized as an intangible asset and the value of the payment at fair market value. These terms were established by the FASB. "
Some common steps are: 1. Communicate the aged invoice/invoices to my direct report. 2. Follow up. 3. Sent reminder letters and emails. 4. Make a call. Call the company's contact one more time and if I do not get the answers I need, I will escalate the call to the manager. Upon talking with the manager, if they are unable to make an immediate payment or set up a payment plan, I let my direct report handle the aging account. (It's very important to note that on the call never threaten or get angry. 5. Legal action/outside collection firms are alway an option.
"This is a scenario that will happen in every business, unless the payment terms of a company are CIA(cash in advance). My first step is be persistent and follow up (documenting all the phone calls, emails, and letters.) call and speak with my contact to understand why payment is not being sent. If they do not respond, I will call the accounts receivable manager and communicate with them on the aged invoice/invoices, and ask for an exact date of payment. If this information is provided, I get off the phone and communicate the discussion with my manager and send a certified letter to the person, detailing the new agreed upon payment date. If the payment is not received, then I escalate this hire level management. "
"Working in Accounts Receivable for over 10 years, my current employer has annual sales of $480mm, one part of the job that is inevitable is experiencing customers that are unable to pay. The four steps that I take to retrieve money from a customer unable to pay are: 1. Be proactive and have a detailed process. a. Even if you're a one-person company, there's no excuse for not having a clearly defined processes and policies for dealing with late payments. Chasing money is time-consuming; having a process in-place will help save time and profitability. 2. Contact the client immediately a.) Communicate with the customer by calling the customer, making a face to face meeting or mailing a letter. Be polite and don't make unreasonable demands. In many cases, the client may simply have been away or has forgotten. 3. Nudge the client harder a.) If the invoices remain unpaid, have a manager contact the person directly responsible for paying invoices. This is fairly easy for larger companies (simply call the reception and ask). It'll also give a chance to build a relationship with another person in the company. In some cases, the organization may simply have a payment schedule which is different to my company's. It's a little more difficult for smaller or one-person companies, but keep persisting. They'll soon be dreading the embarrassment of your regular calls. If payment is considerably delayed, write a formal letter stating a date when late fees and interest will start to accrue. 4. Accept the inevitable a.) If negotiations break down, write a letter and send it certified mail stating that the client is in breach of contract and you have no choice but to withdraw your services. By all means, state that you will be instigating legal action on a specific date and they will be responsible for all debt recovery costs. But don't make empty threats; be prepared to start legal proceedings on the understanding it may cost you more in time and money than the original payment, with no guarantee of success. This step should be done only if the amount owed is substantial. "
This is a very good question and the interviewer is looking for an answer that shows the interviewee is detailed oriented, watches the accounts, takes the initiative and is proactive. If the interviewee does not have any experience, then give an example of a time in a previous job where you were both detailed oriented and proactive. For an example: At my University, I was head of the....and did.... In my previous work experience, I was put in charge of ....
"I have worked as an Accounts Receivable Clerk fo six months and there was one account that I managed as this customer accounted for nearly 60% of the company's business. The customer's aging report started to grow from the 30-60 days outstanding into the 60+ days outstanding. I notified my manager, at which point the account was escalated to the president of the company and he called the customer's business owner and let him know if payment is not made and the account is not brought current, there will not be any additional services that will be provided. The Owner was very surprised to hear the account was not current and an ACH payment was received about a week later. "
"Working in Accounts Recievable for over 8 years, I have heard almost every story and excuses for not paying. I find if I'm doing my job, of ensuring the invoices are sent in a timely manner and communicating with the customer on a regular basis that majority of invoices are paid. My first A/R job was for an assisted living facility, and the residents were all older and some had terminally ill mental and health conditions. The facilities AR aging report was over 90% past due, and largest customer was Medicare. The regulations and proper submission of paperwork into Medicare is very time consuming, so much that I was dedicated over 40 hours a week to submit all the proper requested paperwork , and normally it would be rejected and additional information would need to be provided. The facility was not submitting the additional paperwork and I dedicated 6 weeks of calling into medicare and talking with customer service, who was walking me through the proper online submission of new claims and older active claims. I created instructions on how to properly submit claims to medicare and brought the aging report current with the customer. The experience helped me to be patient, seek information, and understand why the customer was not paying. Once I has the information, then I was able to troubleshoot the root-cause. "
This answer can vary based on the level of experience, but the main points are: 1. Recognize the customer payment- Once a payment is received then it will need to be applied to the customer account in the system. This means that accounts receivable will be debited (to decrease )and cash will be credited (to increase). 2. Reconcile the payment type- Depending how the customer payment was received, it will need to be reconciled. For example, if the payment was an ACH then it's important to double check the bank entry matches the system entry and this includes any banking fees.
"At my current job I am the only A/R clerk and at month end the Accounting Manager will reconcile the cash account. My daily duties are to ensure all payments are reconciled and processed on a daily basis, so each month the Accounting Manager is double checking my work. The entry I'm not responsible for, are any fees associated with wire transfer or credit card fees. This is an entry done by my Supervisor. I have a daily routine and this includes checking all customer payment systems at the beginning of my day and the end of my day. "
"Having worked in the A/R for over 15 years, this is a process the must be done on a daily basis, not matter the size of the company. 'Cash is King' and timelines of cash recognition is very important to a business. As a team lead, I reconcile all cash accounts on a daily basis and ensure all A/R team is also doing this. The receiving of cash in a timely manner allows Senior Level Managers to view the cash flow statement and understand how much cash the business receives on a weekly basis to help them manage both business and importantly be able to make timely payments on the expenses. All this is part of the forecast, and my side of the equation is to ensure accurate recording of cash and A/R. "
For this question, the interviewer is looking for the interviewee to process this question before answering. It's not a common practice and one that most Controllers frown upon. Also, in school, this is one situation that my professor also said was not good practice. I tend to agree, but a business must do what they have to do. I have found that in small to mid sized businesses, where the customer is also a vendor the businesses will swap A/R and A/P amounts to settle accounts.
"My current experience is with a large multinational company and it will not allow a business swap their A/R or A/P to pay down one. But, business owners and Senior Managers must do what they have to in order to keep the business operating. "
"I worked for a small metal shop with annual sales revenue of $6mm, and the company hit a very slow sales window for a four month period and this put the company behind on paying of the vendors. The A/P was almost 90% over 45+ days and the vendors were threatening to cut us off on a daily basis. The Accounting Manager was forced to swap the open A/R balances to pay down the open vendor invoices. This was done on several accounts, and was used as a last option to keep day to day business and operations running. "
If you do not have a personal experience to share, it's okay to answer the question with an experience from one of your co-workers or business department. I have been fortunate not experience this situation, but this has happened a few times within our department..... I have been an Accounts Receivable Specialist for one year and all accounts that need to be escalated once all internal attempts have been made are sent to another person to handle.
"I have not had too many tough collection experiences, primarily because I'm persistent and follow-up on any invoices that are older than 30 days. The toughest experience was when my main customer account was not being paid down, and the amount owed was nearly 16% of total A/R and growing and I put their account on hold for all future orders. The next time the customer called and tried to place and order, the system flagged their account as it being on hold for lack of payment. The President of the company ended up calling the Owner of our business and said nobody from our company informed them of their overdue invoices. I kept all my emails and noted all the times I called the customer and whom I spoke with. I was able to provide all documentation to the business owner and he ended up calling the President back and informed him of all the people I spoke with. The President did apologize and money was sent almost 4 weeks later. "
"When I worked with a property management, I often had to try and collect rent from non-payers. I issued verbal and written reminders and warnings per policy and when they still did not pay they were evicted. This seems harsh but they knew the agreement up front and we did not stray from it. We offered opportunities to come in and talk about the situation and to find a feasible solution. Some people took advantage of the opportunity and we worked payment plans with them. Others were simply evicted. If you hold firm to the policies and processes customers will know you are serious and fair."
An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history of each customer to whom the business extends credit. The balance in each customer account is periodically reconciled with the accounts receivable balance in the general ledger, to ensure accuracy. If they sub-ledger is out of balance, that
"The accounts receivable ledger is a subledger in which is recorded all credit sales made by a business. It is useful for segregating into one location a record of all amounts invoiced to customers, as well as all credit memos and (more rarely) debit memos issued to them, and all payments made against invoices by them."
"he usefulness of the accounts receivable subsidiary ledger lies in the fact that it can show, at a glance, the account status and amounts owed by a specific customer. For example, the general balance may show a total accounts receivable balance of $100,000, but it will not show which customer owes how much. This information can be gleaned from the accounts receivable subsidiary ledger. This ledger will show, for example, that Customer A owes $15,000, Customer B owes $25,000, Customer C owes $5,000, and so on. Without this subsidiary ledger, a company with many customers would have difficulty tracking customer payments and transactions. Like other subsidiary ledgers, the accounts receivable subsidiary ledger merely provide details of the control account in the general ledger. Other subsidiary ledgers include accounts payable subsidiary ledger, inventory subsidiary ledger, and property, plant, and equipment subsidiary ledger. "
For this question the interviewer is looking for the interviewee to be familiar with DSO or Days Outstanding? If you do not know what the acronym stands for then do not be afraid to ask the interviewee. DSO or Days Outstanding and is a measure of the average number of days that it takes a company to collect payment after a sale has been made. This is a very important metric in Accounts Receivable. DSO = Total Accounts Receivable/Total Sales x Number of Days.
"DSO is often determined on a monthly, quarterly or annual basis, and can be calculated by dividing the amount of accounts receivable during a given period by the total value of credit sales during the same period, and multiplying the result by the number of days in the period measured. This is a metric to allow companies to gauge how fast cash flow will be coming in."
"Days Sales Outstanding (DSO) is a widely used method to help evaluate how effective a company is at collecting receivables. This metric is used to measure the average number of days it takes a company to collect what is owed to them after a sale has been completed. Put in fewer words, it is the average collection period. DSO has always been an emphasis for all companies I have worked and is calculated by There is much to know about measuring and interpreting DSO; 1. A low DSO indicates the company is collecting receivables quickly and generally a positive sign. 2. A high DSO proves that a company takes longer to collect on credit sales and can indicate current or impending cash flow problems, operational issues, or a lack of effort or focus on credit collections. A healthy DSO is one that is half the payment terms. For example, is payment terms are net 30 and the DSO is 45 day, then this considered good. "
Accounts receivable specialists are responsible for ensuring that the company they are working for receives all of the money that is due to them for services provided to their customers. The specific tasks that an accounts receivable specialist performs depend on the industry they are working in as well as their employer's modus operandi. In general, an accounts receivable specialist issues invoices for services rendered and ensures that all accounting reports and other aspects of collecting accounts are up to date.
A bachelors degree in a field related to accounts and business is the minimum requirement for anyone who wants to work as an accounts receivable specialist. Meticulous attention to detail and problem-solving skills are crucial traits for the job.Excellent communication skills are also important as you will be required to make collection calls to customers who owe the company money. Prospective employers are sure to do a background check to see if the applicant has any criminal history, as accounts receivable specialists will have access to customers' sensitive personal and financial information such as credit card numbers, contact details, and other information.
At the interview for an accounts receivable specialist job, the interviewer will ask you leading questions to determine your suitability to this role. They will ask you what you think are your strengths and weaknesses that are relevant to the role and why do you think you are a good fit. You will also be asked about your career goals. For example, 'Where do you see yourself 5 years from now?" Check out other mock interview questions to get a better idea of commonly asked questions at accounts receivable specialist interviews.