There are no prerequisites

Course Description

This course shows how to achieve a balance between increased sales and a reasonable amount of bad debt by focusing on the design and management of the credit and collection functions. The discussion ranges from the structure of specific jobs to the full range of collection and litigation tactics that can be used to collect money from customers.


Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).

Course Specifics

Oct 17, 2018
There are no prerequisites

Compliance Information

Qualifies for CA Fraud: No

Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Note the roles of the various employees of the credit and collection functions.

Chapter 2

  • Identify the key procedures and forms needed to operate the credit function.

Chapter 3

  • Cite the key controls needed for the credit function and note what they are intended to accomplish.

Chapter 4

  • State the key procedures and forms needed to operate the collection function, and the situations in which they are applicable.

Chapter 5

  • Identify the key controls needed for the collection function.

Chapter 6

  • Identify the main elements of a credit policy and note the situations in which the policy may be changed.

Chapter 7

  • Cite the contents and handling of a credit application, and note why this process is used.

Chapter 8

  • State the methodologies available for developing credit ratings, and the situations in which credit rating systems can be used.

Chapter 9

  • Itemize the events that can trigger a credit review.

Chapter 10

  • Identify the methods that can be used to interpret the financial statements of a customer.

Chapter 11

  • Cite the methods available for mitigating the risk associated with granting credit.

Chapter 12

  • State the methods used to achieve an efficient and effective billing process.

Chapter 13

  • Itemize the methods available for processing customer payments, and note who is involved in this activity.

Chapter 14

  • Identify the primary tactics used to collect cash from customers, and note how these tactics can be improved.

Chapter 15

  • Cite the management techniques used to deal with payment deductions made by customers.

Chapter 16

  • State the sources of information used to locate customers via skip tracing, and the circumstances under which skip tracing might be necessary.

Chapter 17

  • Note the reasons for using a collection agency, when to use one, and the fee structures they employ.

Chapter 18

  • Identify the reasons for using litigation and the methods for collecting on favorable judgments.

Chapter 19

  • Note the classification of the allowance for doubtful accounts.
  • Cite the methods used to estimate the amount of the allowance for doubtful accounts, and how to account for this allowance.

Chapter 20

  • State the types of technology that can support the credit and collection functions.

Chapter 21

  • Identify the areas in which other parts of a company can cause collection problems, and how to mitigate these problems.

Chapter 22

  • Identify the key measurements used to evaluate the performance of credit and collections, and note how these measurements should be used.

Chapter 23

  • Cite the key laws that impact the credit and collection functions.

Table of Contents

Chapter 1 – Credit and Collection Operations

Learning Objectives


Overview of Credit and Collection Management

The Credit Conundrum

The Collections Janitor Role

Organizational Structure

Job Descriptions

Credit Manager Job Description

Credit Clerk Job Description

Collections Manager Job Description

Collector Job Description

Skip Tracer Job Description

Probationary Period

Work Allocations

Staff Training

Goal Setting

Counterproductive Goals

Staff Compensation

Interdepartmental Relations


Credit Levels Report

Receivables Aging Report

Bad Debt Report

Customer Profitability Report

Employee Experience


Chapter 1 Review Questions

Chapter 2 – Credit Procedures

Learning Objectives


Forms: Sales Order Form

Forms: Credit Application

The Credit Examination Procedure (Manual System)

The Credit Examination Procedure (Integrated System)


Chapter 2 Review Questions

Chapter 3 – Credit Controls

Learning Objectives


In-Process Credit Controls

Alternative Credit Control Systems

Control System for Manual Credit Management

Control System for Computerized Credit Management

Additional Credit Controls – Fraud Related

Additional Credit Controls – Periodic Actions

Additional Accounting Policies


Chapter 3 Review Questions

Chapter 4 – Collection Procedures

Learning Objectives


Forms: The Credit Memo Approval Form

The Collection Procedure

The Credit Memo Request Procedure

The Allowance for Doubtful Accounts Calculation Procedure


Chapter 4 Review Questions

Chapter 5 – Collection Controls

Learning Objectives


In-Process Collection Controls

Alternative Collection Control Systems

Additional Collection Controls

Additional Accounting Policies


Chapter 5 Review Questions

Chapter 6 – The Credit Policy

Learning Objectives


Overview of the Credit Policy

Credit Policy: Mission

Credit Policy: Goals

Credit Policy: Responsibilities

Credit Policy: Review Frequency

Credit Policy: Terms of Sale

Credit Policy: Collection Methodology

Miscellaneous Provisions

Revision Frequency

Distribution of Credit Policy Revisions


Chapter 6 Review Questions

Chapter 7 – The Credit Application

Learning Objectives


The Credit Application

Adjustments to the Credit Application

The Online Credit Application

Trade References

The Incomplete Application

Updating the Credit Application


Chapter 7 Review Questions

Chapter 8 – Customer Credit Ratings

Learning Objectives


The Credit Rating

Internal Credit Rating Systems

Third-Party Credit Ratings

Evaluating Credit Scores

Use of Credit Ratings

Credit Rating Errors


Chapter 8 Review Questions

Chapter 9 – Ongoing Credit Monitoring

Learning Objectives


Credit Documentation

Indicators of Future Payment Delinquency

Ongoing Credit Monitoring Actions

Requests for Credit Increases

The Riskiest Customers

The Demanding Customer

Effects of Industry Credit Practices


Chapter 9 Review Questions

Chapter 10 – Interpretation of Financial Statements

Learning Objectives


Interpretation of Financial Statements

Problems with Financial Statement Analysis

Horizontal Analysis

Vertical Analysis

Cash Coverage Ratio

Current Ratio

Quick Ratio

Liquidity Index

Accounts Payable Turnover Ratio

Accounts Receivable Turnover Ratio

Inventory Turnover Ratio

Fixed Asset Turnover Ratio

Sales to Working Capital Ratio

Debt to Equity Ratio

Fixed Charge Coverage

Breakeven Point

Gross Profit Ratio

Net Profit Ratio

Return on Net Assets

Essential Analysis Tools

The Going Concern Qualification


Chapter 10 Review Questions

Chapter 11 – Credit Risk Reduction

Learning Objectives


The Risk Reduction Concept

Payment Guarantees

Title Retention

UCC-1 Financing Statement

Purchase Money Security Interest

Inventory Consignment


Credit Insurance


Letters of Credit

Export-Import Guarantees

Outside Financing

Distributor Sales

Adjustment of Days to Pay

Cross-Selling Risk

Treatment of Customized Goods

Portfolio Approach to Risk

Alteration of Credit Terms


Chapter 11 Review Questions

Chapter 12 – Customer Billings

Learning Objectives


Billing Processing

Billing Processing

Analysis of Billing Processing

Efficient and Effective Billing

Payment in Advance

Bank Account Debits

Systems Integration

Buffer Staff

Contract Terms Verification

Funding Verification

Update Customer File

Invoice Layout Improvement

Complex Invoice Separation

Invoice Proofreading

Invoice Creation at Delivery Point

Invoice Creation at Shipping Dock

Electronic Invoice Delivery

Shipping Log Exception Tracking

Practices to Avoid

Analysis of Efficient Billing

Statements of Account


Chapter 12 Review Questions

Chapter 13 – Payment Handling

Learning Objectives


Check Receipts

Check Receipt Improvements

The Bank Lockbox

Automatic Cash Application

Mailstop Number

Remote Deposit Capture


Chapter 13 Review Questions

Chapter 14 – Collection Tactics

Learning Objectives


Overview of Collection Tactics

Collection Tactics

Courtesy Calls

Grace Period Reduction

Dunning Letters

Check Payment by Fax or email

Pay Undisputed Line Items

Confirm Payment Date

Take Back Merchandise

Hold Orders

ACH Debits

Split Payments

Postdated Checks

Interest and Penalties

Promissory Note

Salesperson Assistance

COD Roll



Attorney Letters

Final Demand Letter

Issue Small Claims Court Complaint

The Collection Reputation

Credit Repayments

The Collection Call



Phone Skills



Collect in Person


Chapter 14 Review Questions

Chapter 15 – Payment Deductions

Learning Objectives


Deduction Management

Subject Matter Experts

Team Approach

The Deductions Process Flow

Personal Visits

Salesperson Involvement

Repairs Department Involvement

Product Returns Management

Planned Deductions

Deduction Prevention

Customer Terminations

Small Discount Management

Early Payment Discounts


Chapter 15 Review Questions

Chapter 16 – Skip Tracing

Learning Objectives


Cost of Skip Tracing

Skip Tracing Information Sources

Fee-based Search Tools

Profile Reports

Social Media


Location by Social Security Number

Outsourced Skip Tracing

Profile of a Skip Tracer

Skip Tracing Documentation


Chapter 16 Review Questions

Chapter 17 – The Collection Agency

Learning Objectives


The Collection Agency

When to Use a Collection Agency

When to Refer an Account to a Collection Agency

Management of a Collection Agency

Selection Criteria


Contract Terms

Speed of Referral

Paperwork Support

Effectiveness Issues

Fraudulent Customers

Liability Issues

Feedback Issues


Payment Tracking

The In-House Collection Agency


Chapter 17 Review Questions

Chapter 18 – Litigation and Bankruptcy Tactics

Learning Objectives


The Litigation Process

Litigation Advance Preparation

Litigation Prescreening

Litigation Timing

Collection Trigger Points

Attorney Selection

Small Claims Court

Money Judgment Collection Tactics

Bankruptcy Activities

Sell a Creditor Claim

Chapter 11 Bankruptcy

The Involuntary Bankruptcy Petition


Chapter 18 Review Questions

Chapter 19 – The Allowance for Doubtful Accounts

Learning Objectives


Estimation of the Allowance for Doubtful Accounts

Accounting for the Allowance for Doubtful Accounts

The Direct Write-off Method

Negative Bad Debt Expense


Chapter 19 Review Questions

Chapter 20 – Credit and Collection Technology

Learning Objectives


Collection Software

Document Imaging

Payment Deduction Database

Enterprise Resource Planning Systems

Miscellaneous Technology Concepts


Chapter 20 Review Questions

Chapter 21 – Product and Service Improvements

Learning Objectives



Incorrect Order

Product Quality

Shipping Damage

Field Servicing

The Improvement System


Chapter 21 Review Questions

Chapter 22 – Credit and Collection Measurements

Learning Objectives


Overview of Credit and Collection Measurements

Days Sales Outstanding

Best Possible DSO

Collection Effectiveness Index

Measurements Based on Time Buckets

Days Delinquent Sales Outstanding

Average Days to Pay per Collector

Collection Dispute Cycle Time

Deduction Turnover

Average Time to First Contact

Bad Debt Percentage

Collection Performance Report

Average Time to Establish Credit

General Management Measurements


Chapter 22 Review Questions

Chapter 23 – Credit and Collection Laws

Learning Objectives



Fair and Accurate Credit Transactions Act (FACT)

Fair Credit Reporting Act

Fair Debt Collection Practices Act

Service Members Civil Relief Act (SMCRA)

Telephone Consumer Protection Act (TCPA)

Truth in Lending Act (TLA)


Chapter 23 Review Questions

Review Question Answers and Rationales

Chapter 1

Chapter 2

Chapter 3

Chapter 4



Qualified Assessment

Answer Sheet

Course Evaluation



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