30 Accounts Receivable Specialist Interview Questions & Answers
Below is a list of our Accounts Receivable Specialist interview questions. Click on any interview question to view our answer advice and answer examples. You may view 15 answer examples before our paywall loads. Afterwards, you'll be asked to upgrade to view the rest of our answers.
1. Name for me the most important functions of an A/R department.
How to Answer
The accounts receivable department is critical, for any company. The responsibilities of the department may include:
- Customer credit limit applications/approvals
- Establishing payment terms with new customers
- Overviews of customer credit history
- Sending customer invoices and follow up on them
- Updating customer data in master files
- Follow up on late payments
- Communicating payment issues and flagging unstable accounts
- Creating invoices
- Receiving payments and applying them to the correct accounts
Show the interviewer that you take pride in your job, as an A/R Specialist. Discuss why you believe your role.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"I believe that an accounts receivable department has a major role in any company. The responsibilities of the department are the approval of a customers' credit limit by studying the history of the customer. The department sends invoices promptly, updates customer statements and make sure to follow up with the customers' payment commitments. An A/R department can have a huge impact on a business' cash flow situation by ensuring few payments are left outstanding."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"A/R performance has a significant effect on a company's cash flow, so it's crucial that business employes talented A/R people who are organized, detailed, and unafraid to pick up the phone and collect payment. An excellent accounts receivable department will track customer payments, send invoices promptly, keep updated master records, follow up on overdue accounts, and take action when customers are non-responsive."
Written by Bobbi Witt on January 7th, 2019
Experience
"The Accounts Receivable Departments main responsibilities are:
1. Ensuring the credit worthiness of a company to pay its debt and establishing payment terms.
2. Creating invoices
3. Follow up with customers for payment.
4. Receiving the cash and reconciling the AR and cash account."
Written by Bobbi Witt
2. Do you have any plans for continued education?
How to Answer
Some A/R roles do not require post-secondary education, while others need an Associate's Degree or even a Bachelor's Degree. The interviewer would like to know if you are planning to complete some higher education. If you are, it is essential that you express your desire to work in tandem with your classes. The concern of the interviewer is that you will be hired, trained, and then want to leave your job to go back to school full time.
Some organizations will offer tuition support or a reimbursement program for their employees who wish to continue their education. If they do provide this type of perk, you can indeed show interest but make sure that your continued education aspirations are related to the industry and job. If you are working as an accounts receivable professional, you want to avoid saying that you would like to take courses in zoology.
Written by Rachelle Enns
Entry Level
"I like the idea of taking some coursework in Excel and Powerpoint; however, I have no plans to exit the workforce to gain another degree for instance. If other industry related opportunities present themselves, I would be interested."
Written by Rachelle Enns
Answer Example
"I believe that continued education is always a good idea. I like to expand my knowledge when possible. With that said, my job would always come first. I understand that you have a tuition reimbursement program for your employees seeking related coursework. I would be interested in learning more about this down the road."
Written by Rachelle Enns
3. In your opinion, what makes you a great problem solver?
How to Answer
Employers want to know that you have a systematic approach to problem-solving. Consider the skills and qualities that help you successfully face problems. Perhaps you have a keen eye for detail. Maybe you can see opportunity when others can only focus on the issue. Share your strengths as a problem solver, and your ability to come up with innovative solutions.
Strong problem solvers are:
- Systematic thinkers
- Open minded
- Okay with being wrong sometimes
- Always researching and exploring
- Able to identify the core problem
- Able to reverse engineer a challenge to avoid future issues
- Ready to come up with multiple avenues that work well for all stakeholders
- Are do-ers and not worriers
Written by Rachelle Enns
Entry Level
"What makes me a great problem solver is that I have a keen ability to research, read, and explore so that my recommendations are based on fact and study rather than guesses."
Written by Rachelle Enns
Answer Example
"I am a great problem solver because I can compartmentalize all aspects of a problem before studying it. I also like to bring more experienced team members in to add to the solution. I will never try to be a hero and solve a complicated problem without tapping into the resources around me."
Written by Rachelle Enns
4. Have you ever worked in a cross-functional environment?
How to Answer
If you work for a larger company, you may have been asked to work on a project with teams from another department. Your ability to work with cross-functional teams will be a significant asset to your potential employer, especially if they are a larger organization. Maybe you headed a collections project which required you to collaborate with the members of the accounting and sales teams. Share any challenges that came up and what you learned from the experience.
Written by Rachelle Enns
Entry Level
"My current company is pretty flat, as it's a family owned business with a few A/R clerks like myself. I can certainly see how a cross-functional environment would be helpful when it comes to having different team members with varying levels of expertise."
Written by Rachelle Enns
Answer Example
"Yes, I have indeed worked in many cross-functional environments. Currently, I lead the A/R team and collaborate with the sales folks very regularly. We all work well together to ensure customer satisfaction and prompt payment with reasonable terms."
Written by Rachelle Enns
5. What is your current A/R Specialist salary?
How to Answer
It is important to note that this question may be illegal, depending on your geographical location. If you are in a place where it is unlawful for a hiring authority or recruiter to ask this question, you can politely decline by saying, 'I am aware that this question breaches my rights as a candidate in the state of XYZ.'
A potential employer will often want to base their offer on your current salary. Whenever possible, you should be transparent about your most recent earnings and be prepared to back up any salary requests in states or provinces where it is entirely legal to ask about compensation. Keep your answer simple, and to the point. It is indeed okay to ask the interviewer what they are offering in return!
Written by Rachelle Enns
Entry Level
"As I am a recent graduate, I would like to be offered a fair salary that reflects my new education. I am most concerned with joining an organization that will help me to grow my career in marketing. Compensation is not my primary driver."
Written by Rachelle Enns
Answer Example
"I am currently making $38,000 per year with two bonus opportunities based on collections on aged accounts. I am looking for compensation that is aligned with the role and provides an opportunity for growth. Could you share further details with me on your compensation plan?"
Written by Rachelle Enns
6. Have you ever broken company rules, or payment terms, to make a customer happy?
How to Answer
Breaking the rules, and bending them, CAN be different from each other. Often, organizations are okay with you bending the rules to keep a customer happy. You need to know your audience, though! If the company is very stringent when it comes to their policies and procedures, then approach this question with caution. If the organization is well known for being flexible, then you can indeed be more free with your answer.
Written by Rachelle Enns
Entry Level
"I have been trained to know that rules and policy are there for a reason. If I were not sure what to do or were asked to break or bend a rule, I would refer to my employee manual or ask a manager to assist."
Written by Rachelle Enns
Answer Example
"My current company is pretty strict with their policies, so I do not bend to make a customer happy, but I will escalate the issue to someone who has the seniority to decide that. I agree with your organization that it's important to offer some flex on policy, within reason of course."
Written by Rachelle Enns
7. As an A/R Specialist, you will be customer facing. Have you received any formal customer service training?
How to Answer
The interviewer would like to know about any formal training you have received, related to customer service. This training could include a robust onboarding plan, on-the-job training, courses taken, or even books that you have read in your spare time. Show the interviewer that you have an interest in bettering your customer service delivery. This question is a great time to ask the interviewer about their company-specific customer service training and manuals.
Written by Rachelle Enns
Entry Level
"I am newer to my career so I cannot say that I have received any customer service-specific training. I would be happy to take any training that you recommend and would love to hear more about your specific training program."
Written by Rachelle Enns
Answer Example
"Near the beginning of my career, I did take a course on customer service basics as well as training on collection calls. There are best practices that I still implement today, such as active listening, not interrupting, and repeating the problem back to the customer. Because much of my role is over the phone and computer, I have to rely on my voice or wording so keeping a pleasant tone is important."
Written by Rachelle Enns
8. Explain to me the term DSO or, Days Outstanding.
How to Answer
The interviewer is looking for your level of familiarity with the term DSO or Days Outstanding. 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 is made. This metric is a significant one in accounts receivable. DSO = Total Accounts Receivable/Total Sales x Number of Days.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"From what I learned in my latest accounting course is that DSO, or Days Outstanding, is determined on a monthly, quarterly and annual basis. It is a calculation of a company's average collection period. A low DSO can have a remarkable effect on a company's cash flow."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Days Sales Outstanding is a method used to evaluate how active 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 is complete. 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 total accounts receivable over total sales, multiplied by the number of days passed. A low DSO is an excellent thing!"
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
9. How much time needs to pass for an A/R account to be considered delinquent?
How to Answer
This question is a very straightforward one, as the industry standard is usually 90 days. This question is testing your very basic A/R knowledge. Feel free to expand on your response, showing that you are aware of different credit terms for various clients.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"The industry standard for an account to be considered delinquent is 90 days past from the due date. This timeline is the norm; however, not always. Some organizations may have tighter credit terms."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"From my experience, a delinquent account is 90 days; however, I have some clients with shorter credit terms who pay their invoices every 30 days, and some every 180 days. Is 90 days the average for our accounts here at Company ABC?"
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
10. Give me an example of when a credit memo would be issued.
How to Answer
Think of a credit memo as store credit! Businesses who have an unsatisfied customer, perhaps from a defective product or an error in delivery or an invoicing mistake, will often issue a credit memo. As an A/R specialist, you may not be able to adjust the original invoice, especially after delivery or if the invoice is past 30 days. Show the interviewer that you have worked with credit memos in the past. If you are new to your A/R career, show that you understand the purpose of a credit memo.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"A credit memo is best explained as a store credit given to the customer from the seller. Credit memos are extended if there is an issue with a product or service after an invoice is sent out. The credit can be put towards the existing balance on a customer's account. A credit memo is not a refund."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"A credit memo is issued to a customer, in a variety of circumstances, to reduce the balance that the customer owes. Credit memos allow for the fixing of errors without issuing a refund to a customer. I have issued many credit memos in my day and am aware of how to record these in most accounting systems."
Written by Bobbi Witt on January 7th, 2019
Experience
"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)."
Written by Bobbi Witt
11. Do you have experience setting up auto-invoicing for customer accounts?
How to Answer
The hiring authority is seeking further clues on your technical competency. It's one thing to use invoice templates as an A/R professional, but another skill to be able to customize these invoices and set up auto-invoices in a company's accounting software. Simply put, do you know how to set up recurring payments? Most accounting software allows businesses to set up automatic invoices or recurring invoices. Be ready to explain your proficiency in these systems.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"The way an A/R specialist will set up recurring payments will vary for each accounting software. While training, I learned to do this in QuickBooks, Xero, and Sage. I begin by setting up an invoice to occur at a particular time or chosen interval. Once this happens, I can set up auto-sends for the client on the same day, every month."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Auto-Invoicing allows a business to automatically invoice a customer on a regular basis through a recurring setup. This option is perfect for customers 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. In the system we use, after setting up a recurring profile, I set up auto billing. After working in A/R for the past eight years, this is a very straightforward task for me."
Written by Bobbi Witt on January 7th, 2019
Experience
"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)."
Written by Bobbi Witt
12. After receiving a customers' payment, what do you do next?
How to Answer
This question is a very straightforward one that you can answer by drawing on your experience or academic knowledge. Because it is an open-ended question, it is easy to get stuck on your response. Think of the processes that you follow every day, and walk the interviewer through those steps.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"From my understanding, when a customer payment is received, the payment is applied against the open invoice and properly posted to the general ledger. Then the cash will need to be recognized and the invoice updated."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Depending on how the customer payment was received; prepayment or final payment, will determine the next steps. If the customer payment is cash, check, ACH, or wire then it needs to be appropriately applied to outstanding customer invoice. Once I take this step, then I recognize the cash deposit in the cash account."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
13. What are the most common issues related to Accounts Receivable?
How to Answer
The issues which you most often come across in your role as an A/R specialist will show the interviewer the level of responsibility that you currently take on in your position. What you deal with will say a lot about the tasks required of you on a daily basis.
Some examples may include:
- Your customers cannot pay their invoice on time
- You are responsible for collection calls or setting up customer payment plans
- You are fixing inaccurate invoices with old customer information
- Customers are short paying accounts
Written by Bobbi Witt on January 7th, 2019
Entry Level
"The current issues that I experience in my A/R role include invoice discrepancies, client dissatisfaction with the goods or services, customers changing invoice terms despite a contract being in place, and many aged accounts resulting in a high amount of bad debts."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Some issues that I continually face in my current role include slow paying customers with too much credit extended, short payments from customers without any prior communication, customers bringing up dissatisfaction for their service after the invoice has aged over 30 days. I am, of course, able to handle these issues swiftly and professionally."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
14. What is an Accounts Receivable Aging Report, and why do they matter?
How to Answer
An aging report is a critical tool used by collections personnel to determine which invoices are overdue for payment, and by how long. Most aging reports will also have the clients' contact information. As an A/R professional, your work performance may be graded based on these reports, so it's important to understand what these reports are and why they matter. Most aging statements address invoices in 30-day sections so that you can run a report based on 30 days, 31-60 days old, 61-90 days past, and so on. Briefly explain to the interviewer what you understand an A/R Aging Report to be, and why they matter to you as an accounts receivable specialist.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"I took a few classes on Accounts Receivable Aging Reports while earning my Accounting certificate. This report is a major business management tool, showing an A/R specialist exactly which companies or people owe money, are past due, need less credit extended, or new payment terms. Most reports can be run from 30 days, 31-60 days, and 61-90 days so that it's easy to get a quick snapshot of who is behind on payments."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"An accounts receivable specialist will look at an aging report and be able to see a snapshot of clients who frequently fail to pay their invoices on time, or meet their extended credit obligations as per the contract agreement. This report allows A/R staff to fry the biggest fish first - the companies or people who owe the largest amounts of money. This report is especially important if collection agencies need to be engaged, or when customers are ignoring their outstanding debts."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
15. Have you encountered Factoring in your professional experience?
How to Answer
If you are unaware, Factoring is when one company will purchase another company's accounts receivables. This purchase gives a company immediate cash flow to work with, to pay for business needs such as payroll or new equipment. Factoring will generally occur when one company is in financial trouble due to too many outstanding receivables. This situation is never one that a company would desire. Discuss your exposure to factoring, and how you dealt with the process.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"Unpaid accounts can be a slippery slope and, for some businesses that are cash poor, this can lead to the Factoring. I understand this practice to be that of selling receivables, at a discount, to another company. Somewhat like collections. Companies will only do this if they need quick cash and cannot wait for the duration of the credit terms."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"I understand that some companies with extraordinarily long payment terms may find themselves in trouble with cash flow and too many outstanding receivables. This situation is when factoring would come into play. This circumstance is not one that I have ever encountered as an accounts receivable specialist. It's essential that I am highly diligent with every account, never allowing payments to slip through the cracks."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
16. Walk me through your accounts receivable experience.
How to Answer
Bring your resume to life, walking the interviewer through a brief history of your accounts receivable experience. This question is open-ended, and it can be easy to give a long-winded answer. Remain focused by discussing your past job titles, how long you were employed there, and the volume of work you handled. You could also explain the type of customers you were typically working with, or what your most significant achievement was in each role. Mention one thing that you enjoyed about each job. This question offers an excellent opportunity to show the interviewer your passion for accounts receivable.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"I currently work for Company ABC as an Accounts Receivable Specialist. This role has been my only A/R position since graduating with my Associates' Degree in Accounting. I'm solely responsible for invoicing, applying payments to the correct accounts, and collections. I am in a department of thirteen other A/R specialists, and I report directly to the accounts receivable manager. I have worked for my current employer for two and a half years and have drastically helped to reduce aged receivables and increase customer cash flow."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"I have spent the last eight years as a Senior Accounts Receivable and Collections Specialist. I currently oversee a team of three A/R specialists, focused primarily on keeping accounts receivable current by collecting from customers 15 days in arrears, or more. With a total of four team leads, my department has the lowest Days Sales Outstanding in over three years. This low DSO is something I'm very proud of, and it shows how diligent my team has been in collecting payment promptly."
Written by Bobbi Witt on January 7th, 2019
Experience
"I have spent the last eight years as a Senior Accounts Receivable and Collections Specialist for my last company, so I feel prepared to take on additional responsibilities. I oversaw a team of 3 A/R Specialist and focused primarily on keeping A/R current and collecting from customers that were 15 days late. There were a total of four team leads and my department had the lowest DSO for over 3 years (how long I have been a team lead). This is something I'm very proud of and it shows how diligent my team is to collecting payment on a timely manner."
Written by Bobbi Witt on July 24th, 2018
17. What is a Customer Master Record?
How to Answer
The hiring authority would like to see how well you understand basic accounting terminology. Briefly describe the purpose of a Customer Master Record, and what type of information should be stored in the CMR. Also, discuss why an accurate Customer Master Record is essential for a business to keep.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"From my understanding, the Customer Master Record is originally set up by the salesperson in our company, and then it's maintained by me, the A/R Specialist. The information that I maintain and change when needed includes new company name, banking information for payment, business address, and contact information."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"In my current position we keep Customer Master Records on everyone with whom we do business. The critical information included in these digital records consists of shipping and billing addresses, sales tax information, credit references, payment terms, primary contact information, and all signed documents. This record is essential for business operations to run smoothly, and for the accuracy of accounts."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
18. What information is contained in the Accounts Receivable sub-ledger?
How to Answer
The interviewer is looking for your basic A/R knowledge as well as your ability to explain a straightforward concept in an easy to understand way. Walk the hiring authority through the information that an A/R sub-ledger would contain. Briefly describe the purpose of an A/R ledger, and why they are essential in accounting.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"The accounts receivable sub-ledger is a record of all credit sales made by a business. It is useful for compiling one record for a customer that contains all payments, credit terms, and other important historical information."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"An A/R sub-ledger is important because it displays the payment history of a customer who has been extended credit. This information includes all sales, payments, and allowances, allowing anyone looking at the file to have a full snapshot of the customers' financial activity."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
19. If a customer is also a vendor and not paying their invoice, do you think it is good practice to pay them with the open A/R dollar amount?
How to Answer
The interviewer is looking to see how you troubleshoot, and where you stand when it comes to handling cross-over accounts that are in arrears. It's not a common practice to do this, and one that most Controllers dislike. Most schools will agree when you are taking your A/R training, that this is not the best practice; however, a business must do what they have to, to receive payment. Discuss your thoughts on this practice.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"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, as I learned in school, business owners and Senior Managers must do what they have to to keep the business operating. I am sure that I will see more of this practice as I gain further accounting experience."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"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. I worked for a small metal shop with annual sales revenue of $6M, and the company hit a very slow sales window for four months. This dip in business put the company behind on paying off 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 swap was done on several accounts, and was used as a last option to keep day to day business and operations running."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
20. How do you reconcile customer payments from credit card, ACH or wire, to cash or check, in the A/R system?
How to Answer
Your response may vary based on your level of experience, but the main points are:
1. Recognize customer payment. Once payment is received, then it will need to be applied to the customer account in the system. This means that accounts receivable is debited (decreased) and cash will be credited (increased).
2. Reconcile the payment type. Depending on how the customer payment was received, it will need to be reconciled. For example, if the payment was an ACH, then it's essential to double check the bank entry matches the system entry, and this includes any banking fees.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"In 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 daily, so each month the Accounting Manager is double checking my work. The entries 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 and end of each day."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Having worked in A/R for over 15 years, I know this is a process the must be done on a daily basis, no matter the size of the company. 'Cash is King' and timelines of cash recognition is critical to a business. As a team leader, I reconcile all cash accounts on a daily basis and ensure all A/R team is also doing this. The receiving of cash promptly allows Senior Level Managers to view the cash flow statement and understand how much money the business receives on a weekly basis to help them manage the business and 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 receivables."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
21. When you see a large account starting to age, and they are a very good customer, what do you do?
How to Answer
The interviewer is looking for an answer that displays the fact you are detailed oriented, willing to take the initiative and are proactive. As an A/R professional, healthy client relationships can be the difference between a client who pays late and a client who respects your payment terms. Show the interviewer that you understand the balance between great client relationships and timely payment collections.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"I have worked as an Accounts Receivable Clerk for six months, managing one customer account that is worth nearly 30% of my employers' revenue. Shortly after starting my job, the customer's aging report started to grow from the 30-60 days outstanding into the 60+ day's arrears mark. I notified my manager, at which point the account status escalated to the President of the company. Payment was received in full, within 30 days."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Working in accounts receivable for over eight years, I have heard almost every story and excuses for not paying on time. My first A/R job was for an assisted living facility. The facilities aging report was over 90% past due, and the largest customer was Medicare. The regulations and proper submission of paperwork into Medicare are very time-consuming, and I dedicated over 20 hours a week to submit all the proper requested paperwork. Frustrated with returned paperwork, I dedicated six weeks of calling into Medicare and talking with customer service, who walked me through the proper online submission of new claims and earlier active claims. I created instructions on how to properly submit claims to Medicare and brought the aging report to current. The experience helped me to be patient, and seek information. Once I had the information, then I was able to troubleshoot the root cause and create an iron-clad process we could all follow in the future."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
22. When a customer is unable to pay, what are steps that you have taken to retrieve the money?
How to Answer
As an accounts receivable specialist, you will come across situations where you need to get creative with clients, to collect payments. Some common steps are:
1. Communicate the aged invoice/invoices to your direct report
2. Follow up with the client by phone, regularly
3. Send reminder letters and emails
4. Escalate your calls to the department head
5. Legal action/outside collection firms are an option once all avenues have been exhausted
Written by Bobbi Witt on January 7th, 2019
Entry Level
"In my recent A/R training, I learned that it's important to be persistent and consistently follow up by phone, email, and letters. Documentation of every interaction is also key. If my attempts go unrecognized, I am to engage the accounts receivable manager and communicate with them on the aged invoice."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"My current employer has annual sales of $480M, and one part of the job that is inevitable is contacting customers who are unable to pay. The four steps that I take to retrieve money from a customer unable to pay are to be proactive, contact the client immediately and consistently, and be ready to accept the inevitable, which is usually going to collections. I am sure never to make empty threats and to remain professional at all times. The best case scenario is to agree on repayment terms, and to get those terms in writing."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
23. Have you ever worked for a company that accepted cryptocurrency as a form of payment?
How to Answer
Since cryptocurrency is still not mainstream, there is a high likelihood that your response to this question will be 'no.' The point of the interviewer asking this question is to find out if you have taken the time to research and learn about crypto payments.
Briefly discuss what you know about cryptocurrency and be sure to express interest in learning more. An excellent question for the interviewer in return is if the interviewing company currently accepts any form of cryptocurrency. If they do not, perhaps it's in the works!
Written by Bobbi Witt on January 7th, 2019
Entry Level
"In my six months of accounts receivable experience, I have not yet worked with cryptocurrency as a form of payment. I'm familiar with the concept; however, and follow a few blogs on the topic. Cryptocurrency values fluctuate dramatically so for some businesses; it does not make sense to accept this form of payment quite yet. I do look forward to seeing how this plays out in the future months and years."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"I'm very familiar with cryptocurrency, and it's a very hot topic in the Revenue Recognition arena, which impacts accounts receivables. Cryptocurrency may not be currently recognized as revenue on our income statements when the payment is received, but the time is coming. I am eager to learn more about these forms of payment and how they will affect business accounting, overall."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
24. Do you think cash should be accepted as a form of payment?
How to Answer
There are some industries where cash payments are not accepted and other sectors, such as retail and food where cash payments are welcome. Your response is going to depend on the company and the industry with which you are interviewing. Either way, try to respond in a way that does not single out a particular payment type.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"In my growing experience and coming from a younger generation, I rarely carry or use cash. I mostly use a debit or credit card. We debated this topic while I was earning my associates' degree, and our class was divided on this topic. I know of a few restaurants in New York that have moved to a cashless policy 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. Cash-heavy businesses are an easy target for robbers, and e-transactions are an easy target for hacking and have higher fees for business, so there are two sides of the coin in this debate. I also see cryptocurrency transactions increasing, because of the meager fees involved."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"From what I have read in the news recently, some countries are trying to become a cashless society, such as Sweden, where this is a hot-button topic at the moment. For myself, I love to have cash available, and I will use it when paying for food or other quick transactions. Larger purchases; however, are tracked much better when there is a trail associated with a credit card or cheque based transaction. 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. In my opinion, this is a risk. Moving to a cashless option is slowing happening, but all industries will not embrace it."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt
25. Have you ever been in a situation where you had to bargain on an overdue invoice?
How to Answer
Negotiating is a common task for A/R Specialists, and the interviewer is trying to learn what amount of experience you have. Begin by telling the interviewer if you have negotiated payment terms or an invoice in general, with a customer. Discuss what types of deals you have settled 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 which worked out well for you. If you do not have experience in negotiations, that is okay too. You could mention that you are open to training when it comes to collections, or discuss any sales training you may have.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"My current employer gives our clients the opportunity to be flexible with payments more often that I would like to see. This flex is normally given to customers that have an established credit history, and have run into slow times. I have learned it's best to re-establish normal payment terms with the client as soon as possible so that extensions do not become the norm. Although I am newer to my career as an A/R specialist, I am quickly learning the ins and outs of payment defaults and the fast impact they have on a company."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Back in 2011, when many companies were starting to pull out of the economic slowdown, I was given many faulty customer accounts on which to follow up. One by one, I called these customers who had defaulted, and asked for a payment of some type, to re-establish our business relationships. Most of the clients paid at least 50% upfront, with negotiated terms for the remainder of their balances. At first, the idea of performing collections and naming terms made me very nervous, but I am very proud of what I was able to accomplish. In the first week alone, I was able to recover over $359K for our company."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt on July 24th, 2018
26. How do you handle an insufficient funds notice after trying to process a customer payment?
How to Answer
The interviewer wants to know how you handle uncomfortable customer situations. Show the interviewer that, despite the position you're in being awkward, you can stay calm, cool and respectful while following company procedures. Keep in mind that most customers have great intentions, and odds are, they just made a mistake.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"A bounced client payment has only happened to me once, and I started by calling the company directly. I learned that the client accidentally paid the invoice with a check from a closed account. They apologized for any inconvenience and sent another payment right away. We run credit checks on our clients who pay Net 30 or longer, which is why this is generally not an issue in my current role."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"In my current role, we have processes and procedures in place to handle this type of scenario. In my case, I will call the customer directly and be casual about it, on the first call. In all my years of working, I have only had this happened a handful of times, and typically there is a logical explanation like the customer had a check bounce from someone, used the wrong check from a closed account, or their credit card expired, and they were unaware. When you are friendly with customers, they will always find a way to repair the situation as soon as possible."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt on July 24th, 2018
27. When have you had to be extra thorough in completing tasks?
How to Answer
The interviewer would like to know that you are willing to go the extra mile when it's required. Some accounts receivable tasks will require a keener eye and additional diligence. Discuss a time when you were extra thorough during work-related tasks.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"We changed our product catalog recently, so I had to re-memorize a lot of products, codes, and pricing. That following week was month end, so I needed to have my product knowledge up to snuff so that I could invoice quickly. I was proud of my ability to retain all of that data in such a short amount of time."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"In my current inventory control job the company was getting a lot of complaints about late deliveries. I met with the delivery staff and discovered that the problem seemed to be with the stock arriving on time. I investigated and found kinks in our new inventory request process. The backlog was in the orders department as they were not following up adequately with the suppliers. I implemented a system for faster and more accurate follow-up. This system sorted out the stock problems, and the delivery staff was able to meet their deadlines."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt on July 24th, 2018
28. How do you manage your time in Accounts Receivable?
How to Answer
With this behavioral based interview question, the hiring authority wants to hear that you are working wisely and not wasting much time during the day. Think about the ways that you control your time during the day. Perhaps you have a to-do list or plan your day using a particular app or software program. Whatever your method, ensure the interviewer that you are mindful of your time. Show that you deliver quickly on your work while maintaining exceptional quality and accuracy.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"When I first started with ABC Company, it was my first job out of college, and I felt that my days were 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. With my manager's approval, I sat with this colleague for a full day and observed her workflow. To this day, I follow her methods with a few tweaks for myself, including the introduction of Trello for project management."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Among the most effective ways to improve 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 less critical activities. This strategy helps to collect more efficiently, get paid faster, and increase cash flow. Without the right tools and processes in place, an A/R department can be slowed down significantly."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt on July 24th, 2018
29. Why is excellent A/R execution important for a business?
How to Answer
The interviewer is testing your business understanding of the A/R function. There are a few reasons why organized and accurate accounts receivable execution is essential.
1. Integrity and ethics associated with maintaining exceptional business records
2. Ensuring customers are paying their bills means your business is receiving income
3. Every business needs accurate records to know where the company is at financially
4. Enables easier reporting when the A/R function is exceptional
Written by Bobbi Witt on January 7th, 2019
Entry Level
"Accounts receivable is important because it's the area of a business where customer debt becomes cash. Many customers will pay their debts within the normal amount of time, but calculations show that it takes a small business owner an average of 71 days to be paid."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"I believe in the phrase, 'Cash is King,' and that is where an accounts receivable department comes in. A/R is 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 departments are responsible for collecting the cash flow for the company to pay the expenses and debt."
Written by Bobbi Witt on January 7th, 2019
Experience
"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."
Written by Bobbi Witt on July 24th, 2018
30. Have you ever had to prepare a bill or invoice for services rendered? If so what should be included?
How to Answer
The interviewer wants to hear proof that you understand the basics of accounting. The information you need to include on an invoice varies depending on the specific services you perform, but most invoices should consist of:
- Company contact information
- Company logo
- Customer purchase order number (also known as a PO)
- Number of service hours, or price per item
- Dates
- Client contact information
- Total amount due
- Item descriptions
- Freight, for physical products
- Payment terms
- Payment due date
Express to the interviewer that you understand the work that goes into invoicing. Also, if you have ever made invoice templates before, you can mention this experience.
Written by Bobbi Witt on January 7th, 2019
Entry Level
"For the most part, we used templated invoices when I was learning about billing and invoices, in school. I can follow any template or create custom invoices, depending on your needs. A bill for services rendered should have appropriate contact information, dates, a clear breakdown of the services rendered, total amount with tax rates, and due date with payment terms."
Written by Bobbi Witt on January 7th, 2019
Answer Example
"Depending on the company and what they are purchasing, there might be some differences, but the preparation of a bill usually includes: service provider's details, description of service or product, the organizations name and address, taxes, appropriate dates include the invoice and the due date, and net terms. I have created thousands of invoices in my A/R career and fully understand the importance of accuracy and consistency."
Written by Bobbi Witt on January 7th, 2019
Experience
"Depending on the company and their needs and requirements, there might be some differences, but the preparation of a bill usually includes: service provider's details, description of service or purchase, organizations name and address, the bill to name and address, tax/es, date bill was prepared and due date, net terms, payment information.
And if there is any Expenses or abatements incurred by the service receiver less all those things and calculate service Tax and the cess for the balance amount."
Written by Bobbi Witt on July 24th, 2018