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Vinu: Hi Manu, I'm working in a bank and one of our customers has a cash credit facility against their receivables. Do you know of any ways to verify the authenticity of their receivable claims, aside from just collecting invoices?
Manu: Absolutely, Vinu! There are several other methods you can use:
Confirmations: You can directly contact the customer's debtors to confirm outstanding balances.
Sales Records: Examining the customer's sales records can verify the existence of the sales that generated the receivables.
Payment History: Analyzing the customer's payment history with their debtors can reveal any unusual patterns or inconsistencies.
Aging Analysis: This can help identify any past-due accounts.
Credit Reports: Checking the credit reports of the customer's debtors can give you insights into their financial health.
Site Visits: In some cases, visiting the customer's or their debtors' premises might be helpful.
Bank Statements: Reviewing the customer's bank statements can verify whether payments from debtors are being received.
Industry Benchmarks: Comparing the customer's receivables to industry standards can help assess their reasonableness.
External Auditors: If the customer has been audited, their financial statements can provide independent verification.
Data Analytics: Using data analytics tools can help identify any patterns or anomalies in the receivables data.
Vinu: Wow, thanks Manu! That's really helpful. I appreciate the advice.
Manu: You're welcome, Vinu! Remember, it's best to use a combination of these methods for a more comprehensive assessment. And don't hesitate to reach out if you have any more questions.