Accounts Receivable (SOP)
Purpose:
This Standard Operating Procedure (SOP) outlines the step-by-step processes and guidelines for the
Accounts Receivable department to effectively manage customer invoicing, payment receipts, and
collections.
Scope:
This SOP applies to all AMETHYST employees involved in the accounts receivable process within
the organization.
Responsibilities:
1. Accounts Receivable Team: Responsible for generating and sending invoices, receiving
payments, and managing customer accounts.
2. Sales Team: Communicates with customers regarding invoicing and payment-related issues.
3. Finance Manager/Authorized Signatory Approves credit terms and collections strategies.
Procedure:
1. Invoice Generation and Distribution:
1.1. Create invoices promptly upon the completion of goods or services as per the agreed-upon terms.
1.2. Ensure that invoices are accurate, complete, and include all necessary details, such as invoice
number, due date, payment instructions, and contact information.
1.3. Distribute invoices to customers through the agreed-upon method (email, postal mail, etc.).
2. Payment Receipt:
2.1. Receive and record incoming payments from customers.
2.2. Verify the accuracy of payments, ensuring they match the corresponding invoices.
2.3. Immediately deposit checks or cash received in the company's designated bank account.
2.4. Record payment information in the accounts receivable register or accounting software.
3. Reconciliation and Posting:
3.1. Regularly reconcile payment receipts with invoices to ensure all payments are accurately
recorded.
3.2. Investigate and resolve any discrepancies promptly.
3.3. Post payment entries to the general ledger.
4. Collections:
4.1. Monitor outstanding invoices and follow up with customers whose payments are overdue.
4.2. Send payment reminders and statements to overdue customers, as per the established
collections schedule.
4.3. Communicate with the sales team to resolve disputes or discrepancies with customers.
5. Credit Management:
5.1. Establish and maintain credit terms for customers, including credit limits and payment schedules.
5.2. Review and assess the credit worthiness of new customers and periodically evaluate existing
customers' credit status.
5.3. Recommend changes to credit terms based on credit assessments.
6. Customer Communication:
6.1. Maintain open and professional communication with customers regarding invoice inquiries,
disputes,
and payment arrangements
6.2. Ensure customers receive timely responses to their queries and concerns.
7. Record Keeping/Accounting:
7.1. Maintain organized and up-to-date records of all customer invoices, payments, and collections
activities.
7.2. Retain records in compliance with the organization's document retention policy and any legal
requirements.
8. Reporting:
8.1. Generate and share regular reports with management on accounts receivable aging, collections,
and outstanding balances.
8.2. Assist in preparing financial reports and documentation as needed for audits or financial analysis.
Revision and Review:
This SOP should be periodically reviewed and updated to reflect changes in processes, regulations, or
technology. By following this SOP, the organization can ensure a systematic and efficient process for
managing accounts receivable, reducing the risk of overdue payments and improving cash flow.
This SOP can be tailored to meet the specific needs and processes of our organization.
Prepared by Finance Head
Issued by Legal
Reviewed by Chief Financial Officer
Approved Director
Effect from 1st Aug, 2024
