Accounts Receivable Standard Operating Procedure (SOP)

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I. Introduction

I.I Purpose:

This SOP aims to standardize the accounts receivable processes within [YOUR COMPANY NAME], ensuring accuracy, efficiency, and compliance with financial regulations.

I.II Scope:

This document applies to all employees involved in accounts receivable management within the Finance Department of [YOUR COMPANY NAME].

I.III Applicability:

This SOP is mandatory for all relevant staff and departments within [YOUR COMPANY NAME] involved in accounts receivable activities.

II. Definitions

A comprehensive glossary of terms and abbreviations utilized in this Standard Operating Procedure (SOP) is provided below:

• Accounts Receivable (AR): Refers to the outstanding balance of money owed to a firm for goods or services delivered but not yet paid for by customers.

• Credit Memo: A formal document issued to a customer, typically by the seller or service provider, which serves to decrease the amount owed on a previously issued invoice.

III. Responsibilities

This section delineates the specific roles and corresponding responsibilities of accounts receivable management as delineated within this SOP:

• Accounts Receivable Manager: Assumes overall responsibility for the successful implementation and strict adherence to the directives set forth within this SOP.

• Accounts Receivable Clerk: Tasked with the vital responsibilities of invoicing, diligently collecting payments from customers, and meticulously maintaining accurate financial records.

IV. Procedure

A detailed, step-by-step guide on how to execute accounts receivable processes.

IV.I Invoicing

1. Generate invoices for goods or services rendered to customers.

2. Include all necessary details such as invoice number, due date, and payment terms.

IV.II Payment Collection

1. Monitor accounts receivable aging reports to identify overdue invoices.

2. Follow up with customers via phone or email to request payment.

3. Record all payment transactions accurately in the accounting system.

IV.III Credit Management

1. Evaluate the creditworthiness of new customers before extending credit terms.

2. Review credit limits periodically and adjust as necessary based on customer payment history.

V. Documentation and Records

This segment details the requisite documentation and record-keeping protocols vital to the effective management of accounts receivable processes:

• Invoice Template: Outlines precise instructions about the creation and issuance of invoices to customers, ensuring accuracy and consistency in financial transactions.

• Payment Receipt Log: Provides comprehensive guidelines concerning the recording and systematic tracking of incoming payments, facilitating meticulous financial record-keeping practices.

VI. Review and Revisions

Herein lies critical information regarding the periodic review and potential revisions of this SOP:

• Review Frequency: It is mandated that this SOP undergoes a comprehensive review on an annual basis, or following any significant alterations to the accounts receivable procedures.

• Revision History:

Revision Number	Date	Description of Changes	Revised By
1	[DATE]	Initial Creation of SOP	[YOUR NAME]
2	[DATE]	Updates to reflect changes in procedures.	[YOUR NAME]

VII. Approval

[YOUR NAME]
Accounts Receivable Manager

[APPROVAL DATE]

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