cash management and credit control

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:28AM in AAT student discussion
Please help.<BR><BR>I have been given additional questions to answer on my devolved assessment.<BR><BR>1) Lending surpluses.<BR><BR>I have given an answer that provides information on security on return with regards to surpluses, but have now been asked 'if the surplus is short-term what else does a treasurer need to consider'?<BR><BR>2) 'what can a credit controller do to get a slow payer back into terms', I have already answered this with discounts as an incentive etc, but would you take this as factoring, telephoning, sending letters?<BR><BR>3) 'if you plan to go to court, what information would you need to give a solicitor?' I have answered this by saying that you would need to provide evidence of the outstanding debt, breach of contract (terms) etc. So what else would a solicitor need?<BR><BR>I appreciate any help that you can give me as I have moved away from the college where I did this work and therefore have no-one else to ask for advice.<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    cash management and credit control

    I would say for the third one that you would need to provide evidence that you have chased the debt to the company guidelines. We have a company on our books that is unable to chase a £50k debt through the courts because they have not chased the debt in writing and so have no proof that they have followed procedures.<BR><BR>Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    cash management and credit control

    I hope the following is useful;<BR><BR>1) Short-term investment - the treasurer would consider the amount that can be invested, the rate of return, risk and liquidity.<BR><BR>2) Companies should have good credit control procedures in place and send out statements and reminders followed up by telephone calls. Putting the customer on stop is also an option if they do not pay on time.<BR><BR>3) Solicitors would need copies of purchase order, invoice, proof of delivery and Terms and Conditions of Sale. It is crucial to have the correct name and address of the customer.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    cash management and credit control

    Further to responses you have had and from my own experience in Treasury, the following should be taken into consideration.<BR><BR>How is the surplus calculated ? - you should always be aware of the frailties of forecasts and be sure you are dealing with cleared funds. Bills of exchange, BACS recalls and cheques drawn on foreign banks can all trip you up. Leave a buffer zone !<BR><BR>"Short Term" can mean a lot of different terms - overnight to 2-3 months. Make sure you don't lock into a rate when interest rates are volatile, you could fail to maximise your returns.<BR><BR>Deciding who to lend to - if you have access to the Financial Markets via your clearing bank you may wish to deposit with them. However there maybe other institutions who will pay you a premium. Responsible companies operate to a risk matrix which stipulates criteria for lending/investments. This prevents the company treasurer from investing the company millions in , for example, high risk equities.<BR><BR>Always ensure that both parties produce confirmations of the trade. IF a deal is done over the telephone you need to be absolutely clear on the number of noughts on the end !<BR><BR>HTH<BR><BR>David

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