Aer you interested in a new career? The accounts receivable function is critical to any business that sells products or services to customers on a credit basis. This function includes billing customers and collecting on accounts. These two processes, while part of the same function, and with a basis in the same operation (selling on credit), involve some quite different responsibilities and duties. These duties may be segregated or may be combined under the responsibility of the same person or department, depending on the size of the business, the nature of its operations, and the way in which it organizes its administrative functions. And, also depending on the size and nature of the business, the accounts receivable (A/R) function may constitute a separate, stand-alone position, or may be part of a multi-task administrative position, possibly combined with bookkeeping, accounts payable, payroll, or other administrative duties.�
What Does An Accounts Receivable Person Do?
The person in charge of the billing aspect of accounts receivable is responsible for ensuring that all the company’s sales of products and/or services are properly billed, according to the agreed-upon terms and conditions, in a timely manner. The collection function involves ensuring that payments are received from credit customers when they become due. The collections function is often connected with the function of granting credit to customers, and depending on how the organization’s accounting, finance, or administrative department is set up, the person in the collections function could report to the credit manager, or to the controller or a senior-level accountant. If the accounts receivable function forms part of a multi-task administrative position, the person may report directly to the owner or general manager of the business.�
Duties of the Billing Function
The primary responsibility of the person in charge of billing is to ensure that all credit sales are billed in a timely manner. This includes the following duties:
� Keeping files of customer orders and requisitions.
� Keeping files of shipping documents for product deliveries.
� Maintaining files of charges to a customer’s account for sales of services.
� Matching invoices with customer purchase orders, requisitions, or work requests.
� Compiling supporting documents for invoicing customers.
� Generating and mailing or transmitting invoices to customers.
� Coding invoices with the appropriate general ledger account and revenue center numbers.
� Generating and sending or transmitting customer statements of account.
� Reconciling the accounts receivable subledger of individual customer accounts.
� Generating, reviewing, and verifying the accounts receivable aging report.
� Filing invoices with supporting documentation.
� Maintaining customer master file information.�
Duties of the Collections Function
Collections may be a separate function or may be combined with the billing function. In either case, some of the duties involved in collections include the following:
� Assisting (the credit manager) in collecting and compiling financial data and references for potential customers.
� Entering and maintaining customer master file data.
� Monitoring the accounts receivable aging report.
� Making follow-up collection calls to customers.
� Preparing and sending out or transmitting collection letters.
� Reporting to management on past due accounts.
� Providing information on delinquent accounts to collection agencies or attorneys.�
How Are The Working Conditions?
Accounts receivable is normally a part of the accounting, finance or administration department, with an office environment and schedule. Even though there may be direct supervision , accounts receivable work involves a combination of working under self-initiative and working with other members of the accounting or administration team, as well as with members of other departments, such as sales, marketing and shipping. When the A/R function includes responsibility for collections, there will be direct contact with customers, and therefore good communications and interpersonal skills will play an important role.�
What Are The Requirements for This Career?
While accounts receivable is normally considered part of the accounting function, an accounting degree is generally not required, But accounts receivable may be considered an entry-level position for recent graduates who have a degree in accounting, business administration, or finance, or who are pursuing a degree. Knowledge of accounting principles and practices is useful, but a person with strong administrative abilities and knowledge of the billing and collection procedures, and of the company itself, can make a career of accounts receivable.
Organizational ability, in terms of keeping information and files complete and up-to-date, is important in accounts receivable. Attention to detail and thoroughness are characteristics that will contribute to success in this area.
Knowledge of computer systems as a user is very beneficial. Accounts receivable may be a module of a standard accounting software package or a customized accounting system, and training or experience in the same or a similar system will definitely be a plus.
In an A/R position that includes responsibility for collections, good telephone communications ability is a valuable trait. And the ability to diplomatically but effectively obtain results in terms of customers payments is a very important talent. Good writing ability is an integral part of good overall communications skills, since much of the collection effort may also be done through e-mail and regular correspondence.�
What Are The Opportunities and Possibilities?
Business is about selling, billing, collecting and cash flow, and there will always be a need for good accounts receivable people. A person with good overall administrative abilities and a knowledge of the particular company and its operations can make a career as either an accounts receivable specialist in a larger company with segregated administrative functions, or as an office manager or similarly titled position in a company where several administrative functions are combined into one position.
An accounts receivable assignment can also be a good entry-level position, leading to a higher-level position in the accounting or finance department, or in a separate credit department. A person with A/R experience obtains good exposure to the business lifeblood in terms of its customers and sales, and this experience is very valuable in solidifying that person’s status within the company.
Another avenue could be to transition from an accounts receivable position to the sales and marketing function of the business. This would be a shift from what is normally considered an accounting and administrative function, but it could be a career path for a person more inclined and knowledgeable about working with customers, after having experienced the billing and collection process.
Reference:
- American Association of Finance and Accounting: www.aafa.com Center for Education – Careers – Accounting and Financial: ce.com College Board: www.collegeboard.com Job Star: www.jobstar.org U.S. Department of Labor – Bureau of Labor Statistics – Occupational Outlook Handbook: www.bls.gov
