Standard Operating Procedure for Accounts Receivable Specialist

Scope
This SOP applies to all activities related to the accounts receivable function, including invoicing, payment collection, account reconciliation, financial reporting, and risk mitigation. The AR Specialist works closely with the Head of Accounts, Controller, and other finance tea ---------- mbers to ensure smooth and efficient financial operations.

Responsibilities
The Accounts Receivable Specialist is responsible for:
• Invoice Processing: Generating and issuing invoices in a timely and accurate manner.
• Payment Collection and Application: Ensuring prompt collection and proper application of customer payments.
• Accounts Receivable Aging and Follow-Up: Monitoring overdue accounts and following up on outstanding balances.
• Reconciliation and Adjustments: Ensuring all payments are correctly recorded and reconciling discrepancies.
• Reporting and Financial Analysis: Preparing AR aging reports and providing insights on cash flow.
• Compliance and Internal Controls: Ensuring adherence to company policies and financial regulations.
• Risk Mitigation: Identifying and addressing potential risks related to non-payment or fraud.
• Customer Communication and Dispute Resolution: Managing customer inquiries and resolving billing disputes efficiently.

Procedures
Invoice Processing
• Frequency: Daily and as required.
• Process:
• Generate invoices based on completed services, ensuring accuracy in customer details, service descriptions, and pricing.
• Verify all invoices against service agreements and ensure proper approvals are obtained.
• Distribute invoices through email, customer portals, or postal mail based on customer preference.
• Maintain proper documentation of all issued invoices.

Payment Collection and Application
• Frequency: Daily and weekly.
• Process:
• Monitor incoming payments through various channels (bank transfers, credit card payments, checks, ACH).
• Record and apply payments to corresponding invoices in the accounting system.
• Verify that payments match invoice amounts and investigate any discrepancies.
• Provide customers with payment confirmations and update internal records.

Accounts Receivable Aging and Follow-Up
• Frequency: Weekly.
• Process:
• Generate and review AR aging reports to track overdue balances.
• Categorize outstanding invoices into 7-day, 15-day, 30-day, 60-day, 90-day, and 120+ day aging categories.
• Contact customers with overdue balances through phone calls, emails, and official notices.
• Escalate unresolved overdue accounts to the Head of Accounts for further action, such as collection agencies or legal proceedings.

Reconciliation and Adjustments
• Frequency: Weekly and Monthly.
• Process:
• Reconcile customer accounts to ensure payment records match invoice records.
• Investigate and resolve discrepancies such as double payments, incorrect allocations, or missing invoices.
• Process credit memos, write-offs, or adjustments as necessary, following company policies.
• Ensure all adjustments are approved by the Head of Accounts before processing.

Reporting and Financial Analysis
• Frequency: Weekly and Monthly.
• Process:
• Prepare weekly AR status reports highlighting overdue invoices, cash flow trends, and collection performance.
• Submit monthly reports to the Controller detailing outstanding balances, trends, and potential risks.
• Provide cash flow projections based on expected collections.
• Present variance analysis on collected vs. expected revenue and recommend corrective actions.

Compliance and Internal Controls
• Frequency: Ongoing.
• Process:
• Ensure compliance with company policies on invoicing, payment collection, and dispute resolution.
• Adhere to GAAP and company accounting standards when recording AR transactions.
• Implement strong internal controls to prevent fraud, unauthorized discounts, or account manipulations.
• Work closely with external auditors during financial audits.

Risk Mitigation
• Frequency: Ongoing monitoring and quarterly review.
• Process:
• Identify high-risk customers with a history of late or non-payment.
• Implement credit checks before extending payment terms to new customers.
• Establish payment plans for customers with financial difficulties, ensuring proper documentation.
• Report bad debts to the Controller and recommend further actions.

Customer Communication and Dispute Resolution
• Frequency: Daily and as needed.
• Process:
• Respond to customer inquiries regarding invoices, payment status, and account balances.
• Investigate and resolve billing disputes within 48 hours to maintain positive customer relationships.
• Work with the sales and operations teams to clarify discrepancies in invoicing or service details.
• Document all customer interactions related to disputes and resolutions.

Day-to-Day Activities
• Process invoices and ensure proper approvals.
• Monitor customer payments and update financial records.
• Follow up on overdue invoices and escalate as necessary.
• Reconcile accounts and resolve discrepancies.
• Communicate with customers to address inquiries and disputes.
• Prepare AR reports and provide financial insights to management.