Principles of receivable management include authority, proper credit terms, credit investigation, and collection policies and procedures. Receivable management requires the establishment of an authority with a mandate to collect and manage them. It also requires the management to set up the credit terms that determines how the credit is offered and how it will be paid. The credit investigation principle requires the management to have sufficient information about a creditor. The management needs to set up policies on how to collect receivables.

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Principles of receivable management include authority, proper credit terms, credit investigation, and collection policies and procedures. Receivable management requires the establishment of an authority with a mandate to collect and manage them. It also requires the management to set up the credit terms that determines how the credit is offered and how it will be paid. The credit investigation principle requires the management to have sufficient information about a creditor. The management needs to set up policies on how to collect receivables.

Five steps of managing receivables include:

  1. Determine your creditors
  2. Establish receivables payment period
  3. Monitor collection
  4. Evaluate receivable’s liquidity
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