TVET PROGRAM TITLE: Accounts and Budget Support Level –III

MODULE TITLE: Monitoring and Controlling Accounts Receivable

LEARNING OUTCOMES:
At the end of this module the trainer will be able to
LO1: Collect and record monies due
LO2 Review compliance with terms and conditions
LO3: Resolve disputed amounts within predetermined parameters

Monitoring and Controlling Accounts Receivable Page 1

TABLE OF CONTENTS PAGE
LO1: Collect and record monies due .......................................................................................... 3

1.1 All monies due prior to the date hereof" ". ............................................................................... 3

1.2 Accounts receivable .................................................................................................................. 3

1.3 How to Collect Your Money: Debt Collection Tactics ............................................................ 5

1.4 Introduction to Accounts Receivable and Bad Debts Expense ................................................. 7

1.5 Recording Services Provided on Credit .................................................................................... 7

1.6 Accounts Receivable and Bad Debts Expense (Explanation)................................................... 8

1.7 Credit Terms with Discounts .................................................................................................. 10

1.8 Monitoring Accounts Receivable and Recording Business Losses ........................................ 12

1.9 How should I record my business transactions? ..................................................................... 18

1.10 Collecting and storing customer information ....................................................................... 22

LO2 Review compliance with terms and conditions .............................................................. 28

2.1 Terms and Conditions for provision of a Compliance Review........................................... 28

2.2 What are Customer Service Records?................................................................................. 32

LO3: Resolve disputed amounts within predetermined parameters ................................... 39

3.1 Dispute resolution ............................................................................................................... 39

3.2 Types of disputes ................................................................................................................ 40

3.3 Payment Dispute Process .................................................................................................... 41

3.4 Preventing Disputes ............................................................................................................ 44

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LO1. Collect and record monies due
1.1 Determining Status of debt
1.2 Recording and maintaining transactions on account accurately according to organization
policy and guidelines
1.3 Maintaining customer contact records accurately
1.1 All monies due prior to the date hereof
"Collect all monies payable, with respect to the Controlled Compositions, in addition to all
monies due prior to the date hereof, and all performance royalties payable to you with respect to
the Compositions Broadcast Music, Inc. (BMI), or any other applicable performing rights society
(collectively the ―Societies‖), but excluding any ―songwriter‘s share‖ of public performance
income.
How do you record an owner's money that is used to start a company?
If the owner of a sole proprietorship puts money into her or his business, the sole proprietorship
will debit the asset received (Cash, Inventory, Equipment, etc.) and will credit the owner's capital
account (if it is an investment in the business) or will credit a liability account such as Notes
Payable (if it is a loan to the business). The amount that is recorded is the cash amount. If cash
was not involved, then the cash equivalent or fair market value is used.
If the business is a corporation and the owner's infusion of cash is an investment, the account
Common Stock is credited. (If the common stock has a par value, Paid-in Capital in Excess of
Par is also used.) If the owner lends cash to the corporation, the liability account Notes Payable
to Stockholder is credited. When the asset is not cash, the amount recorded is the cash equivalent
or fair market value of the asset or the fair market value of the common stock issued, whichever
is more clear

1.2 Accounts receivable

Accounts receivable is the money that a company has a right to receive because it had provided
customers with goods and/or services. For example, a manufacturer will have an account
receivable when it delivers a truckload of goods to a customer on June 1 and the customer is
allowed to pay in 30 days.

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Is a legally enforceable claim for payment held by a business against its customer/clients for
goods supplied and/or services rendered in execution of the customer's order? These are
generally in the form of invoices raised by a business and delivered to the customer for payment
within an agreed time frame. Accounts receivable is shown in a balance sheet as an asset. It is
one of a series of accounting transactions dealing with the billing of a customer for goods and
services that the customer has ordered. These may be distinguished from notes receivable, which
are debts created through formal legal instruments called promissory notes

Accounts receivable represents money owed by entities to the firm on the sale of products or
services on credit. In most business entities, accounts receivable is typically executed by
generating an invoice and either mailing or electronically delivering it to the customer, who, in
turn, must pay it within an established timeframe, called credit terms or payment terms.

The accounts receivable department uses the sales ledger, because a sales ledger normally
records:
 The sales a business has made.
 The amount of money received for goods or services.
 The amount of money owed at the end of each month varies (debtors).

The accounts receivable team is in charge of receiving funds on behalf of a company and
applying it towards their current pending balances.

Collections and cashiering teams are part of the accounts receivable department. While the
collections department seeks the debtor, the cashiering team applies the monies received.

Money which is owed to a company by a customer for products and services provided on credit.
This is often treated as a current asset on a balance sheet. A specific sale is generally only treated
as an account receivable after the customer is sent an invoice.
Accounts Receivable
Definition: Accounts receivable is short-term amounts due from buyers to a seller who have
purchased goods or services from the seller on credit. Accounts receivable is listed as a current
asset on the seller's balance sheet.
The total amount of accounts receivable allowed to an individual customer is typically limited by
a credit limit, which is set by the seller's credit department, based on the finances of the buyer

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and its past payment history with the seller. Credit limits may be reduced during difficult
financial conditions when the seller cannot afford to incur excessive bad debt losses.

Accounts receivable are commonly paired with the allowance for doubtful accounts (a contra
account), in which is stored a reserve for bad debts. The combined balances in the accounts
receivable and allowance accounts represent the net carrying value of accounts receivable.

The seller may use its accounts receivable as collateral for a loan, or sell them off to a factor in
exchange for immediate cash.

Accounts receivable may be further subdivided into trade receivables and non trade receivables,
where trade receivables are from a company's normal business partners, and non trade
receivables are all other receivables, such as amounts due from employees.

On a company's balance sheet, accounts receivable are the money owed to that company by
entities outside of the company. Account receivables are classified as current assets assuming
that they are due within one calendar year or fiscal year

1.3 How to Collect Your Money: Debt Collection Tactics

"Bad debts are not like good wine; they don't get better with age." Robert Dickinson Esq.
If someone owes you money, can you ask for it? If you dislike nudging slow paying customers,
better get over it or you may have to get out of business. The cliche, "A squeaky wheel gets the
grease," is appropriate if you wish to get paid.
As an entrepreneur, it is up to you to protect your money. Seasoned business pros will tell you to
make it your policy that any new customer wishing credit must submit references. And be
suspicious if a new customer demands immediate credit. Also, be cautious of glowing reports
from unknown references as the applicant may be hiding a poor credit record. A wise policy is to
treat your customer requests for credit as your vendors treat you.
And be sure that that whenever you sell on credit, you immediately send an invoice. It is a wise
policy to insure that no service ever be performed or merchandise shipped without an
accompanying invoice. In fact, send a duplicate as many customers find it helpful to receive two
copies, one to keep for their records and the other to send with their payment.

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Besides invoices, you should send monthly statements listing your customer's payments and all
unpaid invoices. You will find some customers may not keep accurate records, even losing or
forgetting to record your invoices. Sending statements will also alert your customers that you are
aware of outstanding invoices and you expect prompt payment. If you don't, you are inviting
exploitation by unscrupulous customers. Statements are worth the time and postage.
To collect your money, you will find that you must also aggressively manage your receivables
with consistent collection activity. Here are some tactics that work:
1. As soon as payment is past due, send a copy of the invoice to the customer with a notation
requesting their check.
2. When you send out the statement, circle the past due invoices.
3. You will discover that a handwritten note on a statement or invoice is more effective than
computer printed messages or past due stamps and stickers.
4. Call your customer asking when you may expect payment.
5. Tell your customer that you have some large bills coming due, and you will appreciate a
check. This technique can be effective if not used too often.
If none of these suggestions works, you need to be more aggressive. In doing so, you may lose
the customer, but so what, if you can't get paid. Loan officers and other credit managers are well
aware of the problem of past due debt - they know that the older the debt, the less the chance of
collecting it.
Try these tactics:
1. Telephone your customer, demanding a check and threaten to turn the account over to a
collection agency.
2. If your customer claims to have no money, ask for a post-dated check. If the check bounces,
file charges.
3. Visit the customer and demand immediate payment.
4. Have your attorney send a letter demanding payment, or you will begin legal action.
Consistent and frequent follow-up calls will usually get your money.
A must is keeping an accurate payment history for each customer. To do so, establish a method
to monitor your accounts receivables such as listing your customers with all outstanding invoices
grouped by the number of days past due. Accountants refer to this process as 'aging accounts
receivable.' You will find that small business accounting software programs contain such aging

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reports. Remember, you need to know who owes you money, how much they owe you, and how
long have they owed it to you! After all, it's your money.

1.4 Introduction to Accounts Receivable and Bad Debts Expense

If we imagine buying something, such as groceries, it's easy to picture ourselves standing at the
checkout, writing out a personal check, and taking possession of the goods. It's a simple
transaction—we exchange our money for the store's groceries.

In the world of business, however, many companies must be willing to sell their goods (or
services) on credit. This would be equivalent to the grocer transferring ownership of the
groceries to you, issuing a sales invoice, and allowing you to pay for the groceries at a later date.

Whenever a seller decides to offer its goods or services on credit, two things happen: (1) the
seller boosts its potential to increase revenues since many buyers appreciate the convenience and
efficiency of making purchases on credit, and (2) the seller opens itself up to potential losses if
its customers do not pay the sales invoice amount when it becomes due.

Under the accrual basis of accounting (which we will be using throughout our discussion) a
sale on credit will:

1. Increase sales or sales revenues, which are reported on the income statement, and
2. Increase the amount due from customers, which is reported as accounts receivable—an
asset reported on the balance sheet.

If a buyer does not pay the amount it owes, the seller will report:

1. A credit loss or bad debts expense on its income statement, and

2. A reduction of accounts receivable on its balance sheet.

With respect to financial statements, the seller should report its estimated credit losses as soon as
possible using the allowance method. For income tax purposes, however, losses are reported at a
later date through the use of the direct write-off method.

1.5 Recording Services Provided on Credit

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Assume that on June 3, Malloy Design Co. provides $4,000 of graphic design service to one of
its clients with credit terms of net 30 days. (Providing services with credit terms is also referred
to as providing services on account.)

Under the accrual basis of accounting, revenues are considered earned at the time when the
services are provided. This means that on June 3 Malloy will record the revenues it earned, even
though Malloy will not receive the $4,000 until July. Below are the accounts affected on June 3,
the day the service transaction was completed:

Date account name debit credit

June 3 A/R--------------------------------4000
Services revenue ------------------------4000
In this transaction, the debit to Accounts Receivable increases Malloy's current assets, total
assets, working capital, and stockholders' (or owner's) equity—all of which are reported on its
balance sheet. The credit to Service Revenues will increase Malloy's revenues and net income—
both of which are reported on its income statement.

1.6 Accounts Receivable and Bad Debts Expense (Explanation)

Recording Sales of Goods on Credit

When a company sells goods on credit, it reports the transaction on both its income statement
and its balance sheet. On the income statement, increases are reported in sales revenues, cost of
goods sold, and (possibly) expenses. On the balance sheet, an increase is reported in accounts
receivable, a decrease is reported in inventory, and a change is reported in stockholders' equity
for the amount of the net income earned on the sale.

If the sale is made with the terms FOB Shipping Point, the ownership of the goods is transferred
at the seller's dock. If the sale is made with the terms FOB Destination, the ownership of the
goods is transferred at the buyer's dock.

In principle, the seller should record the sales transaction when the ownership of the goods is
transferred to the buyer. Practically speaking, however, accountants typically record the
transaction at the time the sales invoice is prepared and the goods are shipped.

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FOB Shipping Point

Quality Products Co. just sold and shipped $1,000 worth of goods using the terms FOB Shipping
Point. With its cost of goods at 80% of sales value, Quality makes the following entries in its
general ledger:

Account name debit credit

A/R----------------------------------------1000
Sales -----------------------------------------1000
Cost of goods sold --------------------------800
Inventory -------------------------------------800
(While there may be additional expenses with this transaction—such as commission expense—
we are not considering them in our example.)

FOB Shipping Point means the ownership of the goods is transferred to the buyer at the seller's
dock. This means that the buyer is responsible for transporting the goods from Quality Product's
shipping dock. Therefore, all shipping costs (as well as any damage that might be incurred
during transit) are the responsibility of the buyer.

FOB Destination

FOB Destination means the ownership of the goods is transferred at the buyer's dock. This
means the seller is responsible for transporting the goods to the customer's dock, and will factor
in the cost of shipping when it sets its price for the goods.

Let's assume that Gem Merchandise Co. makes a sale to a customer that has a sales value of
$1,050 and a cost of goods sold at $800. This transaction affects the following accounts in Gem's
general ledger:

Account name debit credit

A/R----------------------------------------1050
Sales -----------------------------------------------------1050
Cost of goods sold --------------------------800

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 Inventory -------------------------------------------------800

Because Gem chooses to ship its goods FOB Destination, the ownership of the goods transfers at
the buyer's dock. Therefore, Gem Merchandise assumes all the risks and costs associated with
transporting the goods.

Now let's assume that Gem pays an independent shipping company $50 to transport the goods
from its warehouse to the buyer's dock. Gem records the $50 as an operating expense or selling
expense (in an account such as Delivery Expense, Freight-Out Expense, or Transportation-
Out Expense). If the shipping company allows Gem to pay in 7 days, Gem will make the
following entry in its general ledger:

Account name debit credit

Freight out expense -------------------------------50
A/P---------------------------------------------50

1.7 Credit Terms with Discounts

When a seller offers credit terms of net 30 days, the net amount for the sales transaction is due 30
days after the sales invoice date.

To illustrate the meaning of net, assume that Gem Merchandise Co. sells $1,000 of goods to a
customer. Upon receiving the goods the customer finds that $100 of the goods are not
acceptable. The customer contacts Gem and is instructed to return the unacceptable goods. This
means that Gem's net sale ends up being $900; the customer's net purchase will also be $900
($1,000 minus the $100 returned). It also means that Gem's net receivable from this customer

Unfortunately, companies who sell on credit often find that they don't receive payments from
customers on time. In fact, one study found that if the credit term is net 30 days, the money, on
average, arrived 45 days after the invoice date. In order to speed up these payments, some
companies give credit terms that offer a discount to those customers who pay within a shorter
period of time. The discount is referred to as a sales discount, cash discount, or an early payment
discount, and the shorter period of time is known as the discount period. For example, the term
2/10, net 30 allows a customer to deduct 2% of the net amount owed if the customer pays within

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10 days of the invoice date. If a customer does not pay within the discount period of 10 days, the
net purchase amount (without the discount) is due 30 days after the invoice date.

Using the example from above, let's illustrate how the credit term of 2/10, net 30 works. Gem
Merchandise Co. ships $1,000 of goods and the customer returns $100 of unacceptable goods to
Gem within a few days. At that point, the net amount owed by the customer is $900. If the
customer pays Gem within 10 days of the invoice date, the customer is allowed to deduct $18
(2% of $900) from the net purchase of $900. In other words, the $900 amount can be settled for
$882 if it is paid within the 10-day discount period.

Let's assume that the sale above took place on the first day that Gem was open for business, June
1. On June 6 Gem receives the returned goods and restocks them, and on June 11 it receives
$882 from the buyer. Gem's cost of goods is 80% of their original selling prices (before
discounts). The above transactions are reflected in Gem's general ledger as follows:

If the customer waits 30 days to pay Gem, the June 11 entry shown above will not occur. In its
place will be the following entry on July 1:
Examples of Amounts due Under Varying Credit Terms
The following chart shows the amounts a seller would receive under various credit terms for a
merchandise sale of $1,000 and an authorized return of $100 of goods.

Credit Amount To Be
Terms Brief Description Received
Net 10
The net amount is due within 10 days of the invoice date. $900
days
Net 30
The net amount is due within 30 days of the invoice date. $900
days
Net 60
The net amount is due within 60 days of the invoice date. $900
days
If paid within 10 days of the invoice date, the buyer may deduct 2%
2/10, n/30 $882
from the net amount. ($900 minus $18)
2/10, n/30 If paid in 30 days of the invoice date, the net amount is due. $900

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 If paid within 10 days of the invoice date, the buyer may deduct 1%
1/10, n/60 $891
from the net amount. ($900 minus $9)
1/10, n/60 If paid in 60 days of the invoice date, the net amount is due. $900
The net amount is due within 10 days after the end of the month
Net EOM
(EOM). In other words, payment for any sale made in June is due by $900
10
July 10.

Costs of Discounts
Some people believe that the credit term of 2/10, net 30 is far too generous. They argue that
when a $900 receivable is settled for $882 (simply because the customer pays 20 days early) the
seller is, in effect, giving the buyer the equivalent of a 36% annual interest rate (2% for 20 days
equates to 36% for 360 days). Some sellers won't offer terms such as 2/10, net 30 because of
these high percentage equivalents. Other sellers are discouraged to find that some customers take
the discount and ignore the obligation to pay within the stated discount period.
What is the difference between accounts payable and accounts receivable?
Accounts payable are amounts a company owes because it purchased goods or services on credit
from a supplier or vendor. Accounts receivable are amounts a company has a right to collect
because it sold goods or services on credit to a customer. Accounts payable are liabilities.
Accounts receivable are assets.

Let's assume that Company A sells merchandise to Company B on credit. (Perhaps the invoice
states that the amount is due in 30 days.) Company A will record a sale and will also record an
account receivable. Company B will record the purchase (perhaps as inventory) and will also
record an account payable.
Our example reminds me of an old saying, "There are two sides to every transaction." In
accounting we also expect symmetry: Company A has a sale and a receivable, Company B has a
purchase and a payable.

1.8 Monitoring Accounts Receivable and Recording Business Losses

It‘s important for businesses to closely monitor Accounts Receivable to minimize the recording
of business losses. One of the bookkeeper's crucial responsibilities is to make sure customers pay

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their bills: Before sending out the monthly bills, you should prepare an Aging Summary Report
that lists all customers who owe money to the company and how old each debt is.
Monitoring Accounts Receivable
If you keep the books manually, you collect the necessary information from each customer
account. Otherwise, if you keep the books in a computerized accounting system, you can
generate this report automatically. Either way, your Aging Summary Report should look similar
to this example report:
Aging Summary Report — As of May 1

Customer Current 31–60 Days 61–90 Days >90 Days

S. Smith $84.32 $46.15
J. Doe $65.78
H. Harris $89.54
M. Man $125.35
Totals $173.86 $46.15 $65.78 $125.35

The Aging Summary Report quickly tells you which customers are behind in their bills. In the
case of this example, customers are cut off from future purchases when their payments are more
than 60 days late, so J. Doe and M. Man aren‘t able to buy on store credit until their bills are paid
in full.

Give a copy of your Aging Summary Report to the sales manager so he can alert staff to problem
customers. He can also arrange for the appropriate collections procedures. Each business sets up
its own collections process, but usually it starts with a phone call, followed by letters, and
possibly even legal action, if necessary.

Recording business losses

You may encounter a situation in which your business never gets paid by a customer, even after
an aggressive collections process. In this case, you have no choice but to write off the purchase
as a bad debt and accept the loss.

Most businesses review their Aging Summary Reports every 6 to 12 months and decide which
accounts need to be written off as bad debt. Accounts written off are tracked in a General Ledger
account called Bad Debt. The Bad Debt account appears as an expense account on the income

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statement. When you write off a customer‘s account as bad debt, the Bad Debt account increases,
and the Accounts Receivable account decreases

To give you an idea of how you write off an account, assume that one of your customers never
pays the amount of $105.75 that is due. Here‘s what your journal entry looks like for this bad
debt:

Debit
Credit
Bad Debt $105.75
Accounts Receivable $105.75
In a computerized accounting system, you enter the information using a customer payment form
and allocate the amount due to the Bad Debt expense account.
Monitoring Controls over Accounts Receivable Key Processes
Purpose

This document should be utilized by campus and RF central management teams responsible for
the Accounts Receivable billing and receipts processes as a guideline for developing monitoring
and review procedures.

Note: This document only includes key processes and is not a fully inclusive listing of the
controls to be created, rather a high-level guideline for the campus management teams to assist in
developing your monitoring controls environment.
Invoice Generation
Monitoring Controls:
RF Central & Campuses
 Monitor award billing for completeness and accuracy.
 Reconcile the nightly invoice import from the Oracle Grants Management (OGM)
module to verify the interface completed successfully.
 Monitor items with a 'hold' or 'billable awaiting to be cancelled' status are being resolved
on a timely basis.
 Review printed invoices to ensure that all invoices were properly generated.
 Monitor awards that have not been billed.

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  Monitor draft invoices not approved.
 Review adjustments to invoices in AR coming from OGM.
 Monitor 'hold on draft' invoices.

Reports used for Monitoring Activities:

 Receivables Tie Back – Utilized to ensure invoice interface with the Oracle Grants
Management module was successful.
 Incomplete Invoice Report – Identifies invoices not reconciled.
 Unbilled Receivables Aging Report – Identifies awards that have not been billed.
Customer Setup/Maintenance
Monitoring Controls: RF Central
 Prior to sponsor setups/changes, an on-line review should be performed at the RF central
office to identify if the requested sponsor already exists.
 The Customer Listing Summary Report should be monitored daily to verify new AR
customer accounts have been set-up properly based upon
supporting documentation.
 The RF Central Office should perform a periodic review (monthly or quarterly) to verify
no duplicate sponsors exist. If duplicate sponsors are identified,
the Merge Process should be run.
Reports used for Monitoring Activities:
 Customer Listing Summary Report – Lists all customers and applicable information.
 Customer Merge Execution Report – Use the Customer Merge Execution report to review
the customers and site uses involved in the merge process.
Oracle Receivables automatically generates this report when you initiate the Customer
Merge program.
 Customer Credit Snapshot – Listing shows invoice aging, customer's history and credit
summary.
Invoice Receipt Processing
Monitoring Controls:

RF Central and Decentralized Campuses

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  Monitor aged invoices to ensure that all automatic payments have been received from the
customer (sponsor).
 Monitor unapplied cash receipts for timely resolution.
 Monitor advanced billing receipts and recoups on cost billed invoices (all campuses).
 Monitor cash posted to both 'unidentified' and 'unapplied' accounts.
 Monitor the unapplied cash receipts register to ensure wire receipts were properly applied
to open L.O.C. invoices (all campuses).
Reports used for Monitoring Activities:

 Billing and Receipt History – Identifies cash received not equal to the invoice.
 RF Past Due Invoice Report – Identifies all invoices for which receipts have yet to be
applied.
 Disputed Invoice Report – Identifies the outstanding invoices in dispute.
 RF Unapplied Receipts Register – Utilized to provide information on unapplied cash.
Assists in identifying that a receivable record needs to be created
to apply the receipts to.
 RF Receipts Register – Identifies all cash receipts posted for the day.

Collections
Monitoring Controls:
RF Central and Campuses
 Monitor award billings. The aging report should be reviewed regularly to identify
outstanding invoices greater than 90 days generated from award for which they are
responsible.
 Review the RF Unbilled Receivables report regularly to ensure that unbilled items related
to disputed charges are cleared in a timely manner.
What is a debt-to-income ratio? Why is the debt-to-income ratio important?

A debt-to-income ratio is one way lenders measure your ability to manage the payments you
make every month to repay the money you have borrowed.

To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide
them by your gross monthly income. Your gross monthly income is generally the amount of
money you have earned before your taxes and other deductions are taken out. For example, if

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you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a
month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400
= $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent.
($2000 is 33% of $6000.)

There are some exceptions. For instance, a small creditor must consider your debt-to-income
ratio, but is allowed to offer a Qualified Mortgage with a debt-to-income ratio higher than 43
percent. In most cases your lender is a small creditor if it had under $2 billion in assets in the last
year and it made no more than 500 mortgages in the previous year.

Larger lenders may still make a mortgage loan if your debt-to-income ratio is more than 43
percent, even if this prevents it from being a Qualified Mortgage. But they will have to make a
reasonable, good-faith effort, following the CFPB‘s rules, to determine that you have the ability
to repay the loan.
How to Determine a Company's Total Debt on a Balance Sheet
Liabilities are a company‘s debts, or the amount of money it owes other parties, such as lenders
or suppliers. When you list liabilities on your small business‘s balance sheet, you separate them
into two subsections: current liabilities and long-term liabilities. Current liabilities are those that
you expect to pay within one year. Long-term liabilities are those you expect to pay after a year.
The amount of your small business‘s total liabilities, or total debt, you must report on your
balance sheet equals the sum of your current and long-term liabilities.
Step 1
Determine from your accounting records the amount of your current liabilities, such as accounts
payable, wages payable, short-term notes and the portion of long-term debt due within one year.
Also, include money you have already received from customers for which you have not yet
performed services, called unearned revenue. For example, assume your small business has
$50,000 in accounts payable, $20,000 in short-term notes and $5,000 in unearned revenue.
Step 2
List each item and the amount in the current liabilities subsection of the liabilities section on
your balance sheet.
Step 3

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Calculate the sum of your current liabilities, and list the total at the bottom of the subsection. In
this example, add $50,000, $20,000 and $5,000 to get $75,000 in total current liabilities. List
$75,000 at the bottom of the subsection.
Step 4
Determine from your records the amount of your small business‘s long-term liabilities, such as
long-term notes and bonds payable. Continuing with the example, assume your small business
has $70,000 in long-term notes and $15,000 in bonds payable.
Step 5
List each item in the long-term liabilities subsection of the liabilities section on the balance sheet.
Step 6
Add together your long-term liabilities and list the total at the bottom of the subsection. In this
example, add $70,000 and $15,000 to get $85,000 in total long-term liabilities. List $85,000 at
the bottom of the subsection.
Step 7
Add together your total current liabilities and total long-term liabilities to determine your total
liabilities. Then list your result at the bottom of the liabilities section. In this example, add
$75,000 and $85,000 to get $160,000 in total liabilities. List $160,000 at the bottom of the
section.

1.9 How should I record my business transactions?

A good recordkeeping system includes a summary of your business transactions. Business

transactions are ordinarily summarized in books called journals and ledgers. You can buy them
at your local stationery or office supply store.

A journal is a book where you record each business transaction shown on your supporting
documents. You may have to keep separate journals for transactions that occur frequently.

A ledger is a book that contains the totals from all of your journals. It is organized into different
accounts.

Electronic Records: All requirements that apply to hard copy books and records also apply to
business records which are maintained using electronic accounting software, point of sale

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software, financial software or any other electronic records system. The electronic system must
provide a complete and accurate record of your data that is accessible to the IRS.

Whether you keep paper or electronic journals and ledgers and how you keep them depends on
the type of business you are in. For example, a recordkeeping system for a small business might
include the following items:

 Business checkbook
 Daily and monthly summary of cash receipts
 Check disbursements journal
 Depreciation worksheet
 Employee compensation records

Note: The system you use to record business transactions will be more effective if you follow
good recordkeeping practices. For example, record expenses when they occur, and identify the
sources of income. Generally, it is best to record transactions on a daily basis.
Daily Recording of Business Transactions
While few entrepreneurs start their own businesses because they're fond of paperwork, recording
your day-to-day sales, purchases and other transactions is a must. Learn where to record what,
and how often.

In order to take control of your financial recordkeeping, you must accurately record pertinent
transactions. Specifically, you need to record:

 sales and revenue transactions

 cash transactions
 accounts receivable, if you extend credit to your customers
 accounts payable, if you purchase from your suppliers on credit
 summaries of transactions in your general ledger

Considering Separate Accounting

Do you have more than one product line or department? If so, you may want to keep a separate
set of books for each. Many entrepreneurs find separate accounting provides more meaningful

Monitoring and Controlling Accounts Receivable Page 19

information for their products. The practice may reveal that one product line or department is
profitable and another is not.

Unfortunately, it may be difficult to keep a separate set of books for each product line or
department. For example, some or all expenses may not apply to only one department, but must
be allocated among departments. You should seek the advice of an accountant before setting up
an accounting system of this nature.

Selecting the Right Accounting Software

Shop around for the right accounting software, and be sure to ask for your accountant's opinion.
With so many options like QuickBooks, MYOB, Peachtree and online options, take the time to
consider the pros and cons of each.

While many accountants will do their best to accommodate their clients' already installed
software, their experience with companies of you size and (hopefully) your industry will provide
real insight. If your accountant knows the software you've chosen, he or she will probably help
you set it up.

If you have employees, look for accounting software that permits the use of passwords to control
access to all or some of your accounting transactions. In order to prevent irregularities by your
employees or others, it's wise to restrict access to your accounting records.

Whether your business is a sole proprietorship, partnership or corporation, always keep your
personal transactions separate from your business transactions in your accounting software. For
example, using business funds to pay for personal expenditures complicates your recordkeeping
and can lead to serious tax problems. It can also result in some hefty accounting fees as you pay
your accountant to sort it all out.
Maintaining Sales and Cash Receipts Journals
You record daily sales in a sales journal. To simplify your bookkeeping, we recommend a
combined sales and cash receipts journal. With a journal that combines sales and cash receipts,
you record all sales (cash and credit) and all cash receipts, including collection of accounts
receivable, in one journal, which your software should be able to accommodate.

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Entries in your sales and cash receipts journal come from the source documents you use in your
business every day. These documents are sales invoices, daily cash register totals, daily cash
sheets and daily sales registers.
Keeping Tabs on Sales Invoices
If you use sales invoices, you will post the information from each invoice to an entry in the sales
journal. If you maintain customer charge accounts, you will also be posting entries to
the accounts receivable ledgers so that each customer account is up-to-date. Sales invoices
should be numbered.

While you can store paper copies in file cabinets, with triplicates saved here, there, and
everywhere, tracking invoices digitally makes much more sense.If you prefer a paper method,
though, prepare two copies: one copy for the customer, one for you.

Preferably, you should prepare the invoices in triplicate, with two copies retained by you. File
one by customer name, the other by invoice number. Include canceled or voided invoices when
filing by number so you can account for all of them. The invoice should show:

 the date of the sale

 quantity, if applicable
 price or rate
 an extension column, if applicable (quantity multiplied by price)
 a payment due date

Don't worry about creating a sales invoice template. Most office suites (such as Microsoft Office
or OpenOffice.org) contain a number of invoice templates that may be used as a starting point to
design your own sales invoice. And a quick "sales invoice" Google search will In addition, free
templates may be found on a number of websites.
Recording Cash Register Receipts
If you use cash registers, daily sales can be totaled on the register. Most relatively new cash
registers (those produced within the last 10 or 15 years) should be able to separately record cash
sales and charge sales, and keep track of sales tax.
Some should also be able to record cash received on account. At the end of the business day,
record your cash register totals in the sales journal.

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1.10 Collecting and storing customer information

Collecting and storing information about customers is essential to tailoring your customer service
program and growing your business. However, there are legal requirements regarding what you
can do with the information you have collected.
Privacy
Any customer information that you collect must comply with privacy laws, whether you use this
information or not. The laws also cover how you can store and use the information.

Collecting information

When collecting information about customers, try to find out what your customers are buying,
why they are buying, and how often they are buying. Include any potential customers who have
made enquiries about your goods or services.

There are many ways to collect information on your customers, including:

 order forms
 enquiries
 complaints
 warranty cards
 customer rewards programs
 customer satisfaction surveys
 feedback cards
 customer competitions
 Your website.
Order forms
Order forms let customers order a specific product or service that your business is unable to
supply immediately, and are a good way to collect customer information.
If your business stocks products with specific 'release dates', consider using pre-order forms to
collect customer information. By filling out a pre-order form, a customer makes a commitment to
buy a product and will often pre-pay for it.

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Enquiries
It's good business practice to record the details of any customer enquiries so you can follow them
up. Enquiries also give you an opportunity to collect customer information and mention your
website, mailing list or social media pages.

Recording complaints

Use customer complaints as a way to collect customer information. Not only can you record the
complaint, but also who made it, why, which staff member heard the complaint and what was
done to resolve the problem.

Warranty cards

If your business has products or services that come with a warranty, you can use warranty cards
to collect and store your customers' information.

Customer rewards program

You can collect customer information by implementing a customer rewards program. For
example, a customer VIP club could require customers to give you their details - they then
receive 10% off purchases over $100.

Customer satisfaction surveys

To collect information on customer satisfaction, you could use survey cards where customers
rate, for example, aspects of your service out of 5. The back of the card can ask for the
customer's personal details.

Feedback

Feedback cards can also be used to collect information. You can ask for feedback on specific
aspects of your business or leave it open-ended, like a suggestion box. Again, the back of the
card can request personal details. Share any positive or negative feedback you receive with staff.

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Customer competitions

Customer competitions are an easy way to collect personal information. For example, have
customers place their business cards in a box to go into a monthly draw to win a $20 voucher.

Storing information

You must store information carefully and in accordance with privacy laws.

Remember that customer information is confidential and must be stored securely. Create a plan
for how customer information is to be stored and share it with all staff.

A simple way to store customer information is to use an electronic spreadsheet. If you have more
detailed information, a customer relationship manager (CRM) database might be more suitable.
A CRM can help you analyze customer information to find purchasing trends and identify your
best customers.

Maintaining customer information

Customer information is only useful if it's up to date. It's important to regularly check the
accuracy of your customers' information, and update it where necessary.

Using stored customer information

Make sure you ask your customers if they would like to receive information or updates from you,
and give them the option to opt-out. If you spam customers without their consent they may react
negatively to your business.
5 Ways to Maintain Clean and Accurate Customer Information

Has it ever happened that you make a follow-up call, only to find out that another member of
your team had already contacted the customer? That would be a little embarrassing but where
was the confusion? After cross-checking you clearly noticed that there was no record of a call
being made to the contact, but there sure was a duplicate contact, assigned to another sales rep!

Inaccurate or incomplete CRM data often hamper sales and marketing performance. Many of
your contacts would have changed their phone number, email address or even their company,
leading to an accumulation of redundant and incomplete data in your CRM. So how are you

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going to maintain clean CRM data? Help yourself with these 5 tips to not only get your CRM
system under control but also to save time and headache down the road.

#1 Maintain Complete Data

ask you one question: How complete are my records? Believe it or not, incomplete information is
not a good sign for data quality. The CRM account requires you to fill in numerous fields that are
mandatory. It‘s time-consuming! And as a sales rep, that becomes a reason for you to neglect
proper data entry. The best way to deal with this is to set important fields as mandatory: like
name, email address, phone numbers, and address. So, determine the fields that are most
important for complete information and encourage users to fill in those important details.

#2 Avoid Entry of Duplicate Leads & Contacts

Since email address is unique for each individual, one simple trick to prevent duplicate records is
by comparing the email address of the contacts. While adding a lead/contact in Zoho CRM, you
now have an option to check whether the newly added record already exists in your CRM
account. Now this will definitely save the effort of going through the records for duplicates

#3 Existing Duplicate Records? Merge Them

Preventing duplicates work great when adding new contacts manually, collecting leads/contacts
using web forms, importing, etc. But what about eliminating duplicates from your existing data?
By now, you will surely agree with me when I say that duplicate records are not necessarily
identical. Let‘s say, two contacts have the same last name, email address or company name but
one record has a phone number or address that is not found in the other. This is sometimes
frustrating as some of the crucial information that you are looking for is scattered in both the
records. In that case, instead of blindly deleting one record and potentially losing important data,
you can merge the information into one contact.

#4 maintains a Style Sheet

while automation does most of the work, human efforts are essential for data quality. One way to
make data entry easy and maintain consistency, is by introducing naming conventions.
Sometimes you see the same country name in different formats. For example, USA, US, United
States of America. You can avoid this by creating a list of abbreviations and standard data entry
formats for data items like postal addresses, company names, designations, etc. Having a
standardized format for all the data helps you generate accurate reports and filter records based

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on the exact criteria. Pre-defined drop-down values also helps a lot in eliminating a small part of
the problem.

#5 Use Roles for Security

With data pouring in from several sources and multiple users accessing it, maintaining a clean
CRM database is not that easy. One best practice is to restrict access to data in your CRM
account. Define Roles that will help you control the access rights of users while working with
CRM data. That way, users will modify only those records that are relevant to them.

We all realize how important it is to add clean data in the CRM system… and not just that, to
avidly maintain it too! Maintaining data quality is not a one-time event. If not taken care from
the beginning, you may end up having a tedious task ahead

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Monitoring and Controlling Accounts Receivable Page 27
LO2. Review compliance with terms and conditions
2.1 Identifying customers terms of breach and conditions correctly and contacted promptly and
courteously to bring account within terms

2.1 Terms and Conditions for provision of a Compliance Review

The conditions below relate to the provision of the Compliance Review Service by Estate Agents
Co-operative Ltd (us, we) and the Customer (you, your).

1. The work undertaken by us to form an opinion in relation to the compliance of an office

is permeated by judgment, in particular, regarding the nature, timing and extent of the
review procedures for gathering of compliance evidence and drawing of conclusions
based on the information gathered during the review.
2. In addition, there are inherent limitations in any review, and these include the use of
testing, the inherent limitation of any internal control system, the possibility of collusion
and the fact that some review evidence can be persuasive rather than conclusive.
3. Accordingly, there are inherent limitations upon any review due to the reliance upon your
offices internal records, procedures and representations. Any representation or statement
may result in the review becoming inaccurate. As a result, our review can only provide
reasonable – not absolute – assurance that an office is compliant in the areas that are
checked.
4. You agree to ensure that all information and material provided to us is accurate and
contains no undisclosed misstatement or irregularity. Further, it is acknowledged that we
rely upon the accuracy of all information and material provided to us in the course of our
compliance review.
5. In completing the review it will therefore be necessary for us to have access to all source
documents which we may request. You agree to provide any documents and information
which we may, during our review, request you to provide to us. EAC undertakes to use
this information only for the purposes of conducting the review and will not disclose it to
any Third Party.
6. We will report on the day the review is performed any significant matters which come to
our notice with any less significant matter being reported in the final report provided.

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Risk and Compliance terms and conditions
The contract between us
2. By applying for Risk and Compliance Service membership, you agree to these terms and
conditions.
3. These terms and conditions shall apply to and be deemed to be incorporated into all Risk and
Compliance Service membership contracts to the exclusion of any terms or conditions contained
or referred to in any documents proffered by you or implied by trade, custom and practice or
course of dealing, unless specifically agreed to in writing by us.
4. We must receive payment of the whole price of the membership you request before your
membership can be accepted. Once payment has been received by us, we will confirm whether
your membership has been accepted by sending to you an email confirmation at the email
address specified in your membership application. Our acceptance of your membership
constitutes a legally binding contract between us.
5. We reserve the right to refuse any request for membership at our sole discretion, or to cancel
your membership at any point during your membership year.
6. The use of any promotional code is subject to the rules of the relevant promotion.
Price
7. The pricing for membership of the Risk and Compliance Service is set out on our website.
8. All prices are expressed exclusive of any VAT payable unless otherwise stated.
9. Your credit/debit card details will be encrypted to minimize the possibility of UN authorized
access or disclosure. Authority for payment must be given at the time of placing your order. The
cost of your order includes a transaction fee that is payable to it.
Membership
10. Membership is on an individual or firm basis, depending on the selection you make.
Membership runs for a calendar year from 1 January to 31 December, and may be renewed for
successive calendar years. Where applications are received during a calendar year, membership
runs until the end of the current calendar year. This is subject to any promotional offers that may
become available from time to time, which offer extended periods of membership.
11. Firm membership covers up to five named individuals. You must tell us who you wish the
individuals covered by the firm membership to be, and identify one as being the firm‘s principal
member. You may change the individuals and principal member at any time on notice to us.
12. All entitlements related to your membership are set out on our website.

Monitoring and Controlling Accounts Receivable Page 29

13. All updates and membership information will be sent via email. These emails will be sent to
you at the email address specified in your registration information. We can accept no
responsibility if you do not update your registration information with your current email address
or (because of the nature of email communications) if these emails do not reach you for some
other reason.
14. We are continually seeking to improve the membership service. We reserve the right, at our
discretion, to make changes to any part of the membership service provided that it does not
materially reduce its content or the benefits under it.
15. Members may state on their website and publicity/marketing materials that they are members
of the Risk and Compliance Service, but they must not use the Law Society coat of arms logo, or
any other Law Society branding, without our prior written consent. If you exercise this
permission, you must do so in a way that is fair and legal and does not damage our reputation or
take advantage of it, or suggest any form of association, approval or endorsement on our part
where none exists. We reserve the right to withdraw any permission given in this Clause on
notice to you.
16. Information and materials supplied as part of your membership (including any monthly e-
newsletter) is for use by you/the individuals covered by a firm membership for reference
purposes only. It shall not be republished, or incorporated in any other work or publication,
whether in paper or electronic form, without our prior written permission.
17. Any permissions relating to the use of service material, such as the content of e-newsletters,
should be addressed
18. If you have firm membership, all queries under the ‗safe harbor‘ scheme element of the
membership service shall be raised with us by the individual identified to us as the firm‘s
principal member.
Password and security
19. You must keep any password and promotional codes confidential and must not disclose them
or share them with anyone. If you know or suspect that someone else knows the password or any
promotional code
Cancellation
20. You have the right to cancel your membership by giving us notice at any time. If you cancel
within 14 days of the day on which we email to confirm acceptance of your membership, we will
reimburse all sums paid by you or on your behalf for your membership. Please note, this right to

Monitoring and Controlling Accounts Receivable Page 30

be reimbursed will cease if we begin to provide you with any membership benefits with your
agreement in that time. If you cancel after 14 days, you will not be entitled to any refund, and no
sums paid will be reimbursed.
21. We may terminate your membership by giving you notice if you are in material breach of
these terms and conditions and the breach is not remedied within a period of seven days after
written notice of the breach has been given to you.
Disclaimers and liability
22. Nothing in these terms and conditions will affect your statutory rights if you are a consumer,
or limit or exclude our liability for death or personal injury caused by negligence, fraudulent
misrepresentation and any other liability which cannot lawfully be excluded or limited by
English law.
23. Although we aim to offer you the best service possible, we make no promise that
membership will meet all your requirements.
24. We cannot guarantee any Risk and Compliance Service website will be available at all times
or fault free.
25. To the maximum extent permitted by law, we expressly exclude all conditions, warranties
and other terms which might otherwise be implied by the law.
26. If we are in breach of these terms and conditions, we will only be responsible for any losses
that you suffer as a result of that breach to the extent that such losses are a foreseeable
consequence to both of us at the time you use the relevant membership service. Our liability shall
not in any event include economic and/or business losses such as any direct or indirect loss of
profits, time, revenue, goodwill, business, data or anticipated savings.
27. Furthermore, our total liability to you in respect of all causes of action arising out of or in
connection with these terms and conditions and your Risk and Compliance Service membership,
whether for breach of contract, tort (including, without limitation, negligence), misrepresentation
or otherwise, shall not exceed the price paid for your membership.
Amendments
28. We may update these terms and conditions from time to time, including for legal or
regulatory reasons, to allow the proper provision of the membership services, or to allow the
proper operation of our websites. The changes will apply after we have given notice of them to
you.
Miscellaneous

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30. You may not transfer any of your rights under these terms and conditions to any other
person. We may transfer our rights under these terms and conditions where we reasonably
believe your rights will not be affected.
31. If you breach these terms and conditions and we choose to ignore this, we will still be
entitled to use our rights and remedies at a later date or in any other situation where you breach
the terms and conditions.
32. We shall not be responsible for any breach of the terms and conditions caused by
circumstances beyond our reasonable control.
33. A person who is not a party to this contract (including any individual accessing this website
under corporate membership) shall have no right under the UK Contracts (Rights of Third
Parties) Act 1999 to enforce any term of this contract. This does not affect any right or remedy of
a person who is not a party to this contract that exists or is available apart from that Act.

34. Unless otherwise expressly stated in these terms and conditions, all notices from you to us
will be sent by post or hand delivered to the address and all notices from us to you will be sent
by email to the address specified in your registration details, or via a suitable announcement on
our website.

35. These conditions shall be subject to the laws governing England. We will try to resolve any
disagreements quickly, but if you are not happy with the way we deal with any disagreement and
you want to take court proceedings, you must do so within England.
2.2 What are Customer Service Records?
Accurate records are an important part of good customer service. All organizations will keep
records of dealings with their customers.

Customer records can provide information about how best to market a company's services and
also help to ensure that the organization runs smoothly. Most records will be stored
electronically on a database.

1.How is customer service records created?

Contact with customers is often necessary to gather the information. Contact can be face to face,
written, electronic e.g email, and social media or over the telephone.
Overdrafts Terms & Conditions
In these Terms and Conditions:

Monitoring and Controlling Accounts Receivable Page 32

"Account" means the current account in your name with the number detailed at the bottom of
this page or any account opened in substitution for it;
―Important Information‖ means the Important Information including the Additional Important
Information set in your credit agreement;
"Normal Review Date" means the first and any subsequent anniversary of the Date of
Sanction shown in the Important Information to the extent the Facility is still in place on such an
anniversary;
“Overdraft Limit” means the amount shown as such in the Important Information and also
includes a reference to a revised limit for the Facility where the Bank agrees to that in writing.
“You”, “yours”, “you‖ means (a) the person or each person named as ―you‖ or the ―customer‖
in the credit agreement and his or her personal representatives, successors and assigns; and
(b) all or some of such persons so named if the context requires or allows this meaning.
2.0 Provision of the Facility
2.1 You may avail of the Facility by any means of withdrawing or transferring money from the
account including where you do so in a branch of the Bank, by telephone instruction, online, by
writing a cheque or by the use of a debit card (this is a list of examples and is not intended to be
exhaustive).
2.2 The Bank will review the Facility on the Normal Review Date. The Bank may extend the
Facility beyond the Normal Review Date but it is not obliged to do so. In addition, the Bank may
review the Facility at its discretion at any time including between Normal Review Dates.
2.3 You must ensure that you do not allow the amount overdrawn on the account to exceed the
Overdraft Limit set out in the Important Information.
3.0 Demand Nature of the Facility
3.1 The Bank has the right at any time at its discretion to cancel the Facility and to demand that
you repay the Facility and any interest accrued on it at any time. You agree to repay the Facility
and any such interest and pay charges and other amounts owing by you in relation to the Facility
on the Bank‘s demand at any time.
4.0 Security
4.1 Where the Important Information indicates security is required by the Bank you cannot avail
of the Facility until all such security requirements have been completed in full to the satisfaction
of the Bank.

Monitoring and Controlling Accounts Receivable Page 33

4.2 You agree to pay the Bank all legal charges and other costs associated with the completion of
the Bank's security requirements (if any) and you also agree that the Bank has your authority to
make withdrawals from your account to pay them as they arise.
4.3 Any mortgage held by the Bank over a 'house' within the meaning of the Consumer Credit
Act, 1995 (and including a site for such a house) will not secure the Facility unless the
Important Information indicates otherwise.
5.0 Interest
5.1 The Bank may vary the borrowing rate up or down at any time or times at its discretion. The
Bank will notify you in advance of borrowing rate increases in accordance with the European
Communities (Consumer Credit) Regulations 2010.
Bank of Ireland is regulated by the Central Bank of Ireland 37-1235R (02/13)
5.2 Without prejudice to Clauses 5.1, the borrowing rate is normally determined by the Bank by
reference to prevailing market rates (but is not linked to movements in such rates), your
entitlement to any special features and the risk associated with the Facility.
5.3 The Bank will calculate interest on the daily balance outstanding (after adjustment is made
for cheques in the course of collection). Interest on the Facility is calculated at the Borrowing
Rate shown in the Important Information on a daily basis and is charged by the Bank quarterly.
6.0 Charges
6.1 The Bank charges you a fee (the "Overdraft Facility Fee") of €30.00 which is first due on the
Date of Sanction set out in the Important Information.
6.2 The Bank is entitled to charge you the Overdraft Facility Fee if it sanctions an increase in the
amount of the Facility which will be due on the date the Bank sanctions the increases.
6.3 The Overdraft Facility Fee is also payable annually on each anniversary date of the date is
was last due under Clause 6.1 or 6.2 above..
6.4 The Bank will charge you an overlimit item charge each time a transaction is carried out (a)
which results in the Overdraft Limit being exceeded; and (b) which results in money being
withdrawn or transferred from the account whilst the Overdraft Limit is exceeded. The over limit
item charges are as follows at the date of the credit agreement:
• First over limit Item in a quarter No Charge
• Second and third Items per quarter €3.50 each
• Fourth and fifth Items per quarter €5.00 each
• Sixth and subsequent Items per quarter €10.00 each

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6.5 The Bank may alter the charges applicable to the Facility and the Bank may introduce new
charges at its discretion at any time (subject to notification to the relevant regulatory authority).
The Bank will notify you of any such changes or new charges in advance.
7.0 Interest Surcharges
There are two surcharges which may apply in different circumstances set out in Clauses
7.1 Where (a) the Overdraft Limit is exceeded or (b) you do not pay the Bank an amount
demanded by it under Clause 3, the Bank will charge you surcharge interest. The rate of
surcharge interest is 0.60% per month or part of a month (which is 7.20% per annum).
7.2 The Bank will apply the surcharge interest rate from the date on which you:
(a) Exceed the agreed Overdraft Limit until the date you reduce the amount overdrawn on the
account to the Overdraft Limit; or
(b) Fail to pay an amount demanded by the Bank under Clause 3 until the date on which you pay
the Bank the amount it demanded ;(as applicable).
7.3 The surcharge interest rate:-
7.3.1 is charged by the Bank in addition to the normal interest which it charges you and is
payable by you at the same time and in the same way as that normal interest;
7.3.2 accrues before and after any judgment the Bank obtains against you;
7.3.3 may be changed by the Bank at any time by giving you notice as provided for in Clause
7.3.4 will (where the Overdraft Limit is exceeded) be charged by the Bank on the amount by
which you exceed the Overdraft Limit or (if the Bank so decides in its absolute discretion) on the
total amount by which the account is overdrawn including any amount within the Overdraft
Limit;
7.3.5 Will (where you fail to pay the Bank an amount it demands under Clause 3) be charged by
the Bank on the amount you fail to pay the Bank following its demand that you pay it; and
7.3.6 Is liquidated damages to compensate the Bank including for the additional risk and for
administration and other costs which arise from a customer‘s failure to pay the Bank a sum when
due.
7.4 The Bank requires you to ensure that the account reverts to credit for at least 30 days
(a) During the 12 month period that begins on the Date of Sanction shown in the Important
Information and during each subsequent 12 month period; or
(b) Where a previous Overdraft Limit on the Account existed on the date of the credit agreement,
during each 12 month period that begins on the annual date already set by the Bank for the

Monitoring and Controlling Accounts Receivable Page 35

previous Overdraft Limit. If you wish the Bank to remind you of the date set for a previous
Overdraft Limit, please contact us at 1890 365 100 or contact any Bank of Ireland branch.
7.5 The 30 days mentioned in Clause 7.4 need not follow each other.
7.6 Where you fail to comply with Clause 7.4, the Bank will charge you an additional interest
rate of 0.75% per annum.
This will be charged retrospectively for the relevant 12 month period based on the average full
overdrawn balance in the account over that time. This interest rate is in addition to the borrowing
rate applicable to the account and will generally be included in the interest at the next interest
quarter posting date.
7.7 Clauses 7.3.2 and 7.3.3 and 7.3.6 also apply to surcharge interest charged under Clause
8.0 Term and Termination
8.1 The Facility is immediately repayable whether or not the Bank demands repayment of it in
the event of your bankruptcy, death or contractual incapacity (unless the Bank agrees otherwise).
8.2 You can cancel the facility at any time without penalty by notifying the Bank that you intend
to do so. However, you must clear the overdraft and pay interest and charges and any other
amount owing by you in relation to the Facility before you cancel it.
9.0 Joint Borrowings
9.1 Where more than one person is named, as ‗you‘ or the ‗customer‘ in the agreement, any
reference in the agreement to ―you‖ or the "customer" includes a reference to each of you and
your agreements, obligations and liabilities under your credit agreement are joint and several.
Any notice given to the first of you named as ―you‖ or the ―customer‖ in your credit agreement
shall be deemed to be given to all of you.
10.0 Assignment & Disclosure of Information
10.1 You consent irrevocably to any future transfer, howsoever arising of the Facility, the credit
agreement and any or all security held for the Facility, whether as part of a transfer and
securitization scheme or otherwise.
10.2 You authorize the Bank to disclose any information or documentation relating to the
Facility, the credit agreement, and any and all security held for the Facility to third parties
including members of the Bank of Ireland Group for the purposes set out in this Clause. You
agree that your authorization is consent for the purposes of the Data Protection Act, 1988 as
amended and that it does not limit or qualify any other consent you have given or may give for
the purposes of that Act.

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11.0 Variation of Conditions
11.1 The Bank reserves the right at all times to vary the terms and conditions of the credit
agreement. Any such variation will become effective upon notice to you by any means the Bank
considers reasonable or as is required by law or regulation. Such notice may take the form of an
advertisement in an Irish Daily or Weekly Newspaper circulated nationally.
12.0 Law, Jurisdiction and Language
12.1. Irish law applies to the credit agreement and the courts of Ireland will have jurisdiction on
any matter arising from it.
12.2 The Bank will communicate with you in English in relation to the credit agreement.

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LO3. Resolve disputed amounts within predetermined parameters
3.1 Researching background of claim thoroughly based on client's outline of dispute
3.2 Checking records thoroughly for verification of all case material
3.3 Identifying and resolving type of claim correctly in accordance with organization policy
and procedures

3.1 Dispute resolution

Dispute resolution is the process of resolving disputes between parties.

Judicial dispute resolution
The legal system provides resolutions for many different types of disputes. However, some
disputants will not reach agreement through a collaborative processes, Some disputes need the
coercive power of the state to enforce a resolution. Perhaps more importantly, many people want
a professional advocate when they become involved in a dispute, particularly if the dispute
involves perceived legal rights, legal wrongdoing, or threat of legal action against them.
The most common form of judicial dispute resolution is litigation. Litigation is initiated when
one party files suit against another. Litigation is facilitated by the government within federal,
state, and municipal courts. The proceedings are very formal and are governed by rules, such as
rules of evidence and procedure, which are established by the legislature. Outcomes are decided
by an impartial judge and/or jury, based on the factual questions of the case and the application
law. The verdict of the court is binding, not advisory; however, both parties have the right to
appeal the judgment to a higher court. Judicial dispute resolution is typically adversarial in
nature, for example, involving antagonistic parties or opposing interests seeking an outcome
most favorable to their position.
This policy describes what to do when you have a dispute with another editor.
The "dispute resolution" sidebar (right) has direct links to filing requests for many of the dispute
resolution levels, but requesting dispute resolution involves different guidelines and application
processes for each level. Dispute resolution requests can help familiarize you with each of them.
Dispute Resolution
Disputes arise from time to time in small businesses over a range of issues and can involve
customers, suppliers, partners, and employees.

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Resolving a dispute can take considerable time, effort and money that would be better used to
operate, manage, or grow your business. It is preferable to resolve the dispute as cost effectively
and with as little damage to the relationship as possible.

While there could be several ways to resolve disputes, many can be easily managed through
direct discussion, common sense and informal negotiation between parties. However, some
significant or complex disputes may need to be resolved using a more formal process.

3.2 Types of disputes

The approach required to resolve disputes will vary according to how the dispute is categorised.
Generally, disputes in small business can be categorised into one of four issues:
 Debt owed
 Customer complaints
 Contractual obligations
 Employee disputes
Top 4 tips for resolving disputes
TIP 1: Be clear and logical about the facts

 Document the relevant details about the dispute.

 Record dates, times, product or service details, summary of discussions, promises or
verbal agreements and the details of each party to the dispute.
 Document each problem relating to the same issue separately; it may be possible to
resolve a few smaller issues one at a time.
 Find out the rights and obligations of each party to the dispute, and if there are any
specific organizations you should be talking to.
 The solution or action required will often be obvious once the rights and obligations are
clarified.
 Record how each party would like the dispute resolved.

TIP 2: Organize the evidence

 Collect all documents relevant to the issue (contracts, leases, receipts, warranties,
invoices, orders, and photographs).

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  Tag the relevant clauses of any contract or lease.
 Organize the facts in chronological and subject order.

TIP 3: Identify what you want

 Be clear about the remedy being sought by you or the other party. The remedy could
include compensation, refund, repair, replacement, an apology, change in behaviour or a
combination of these.
 Ask the other party about what is important to them and what remedy they are seeking.
 Remember that each party has a common interest in resolving the matter quickly, fairly
and cheaply. A direct exchange of information may present a solution that is acceptable
to both parties.

TIP 4: Be calm and show respect

 Present your case calmly and show respect for the other party's point of view. Animosity
from a badly managed dispute can cause long term adverse effects on your business.
 Be prepared to compromise and give a little when the other party is prepared to do the
same.

3.3 Payment Dispute Process

When a buyer disputes a payment, their card issuer contacts us to get more information about the
sale. We will then reach out to you to request any supporting evidence you have to assist us in
challenging the dispute. This process is completely free – Square does not charge you for
receiving the dispute or for our assistance in helping you each step of the way.

If your dispute meets the eligibility requirements for Square Chargeback Protection, you will not
be held liable for the disputed funds, regardless of the bank‘s final decision.

We want your case resolved as swiftly as possible, but keep in mind that the timeframes and
procedures surrounding the dispute process are managed by the card networks — not by Square.
We will do our best to represent your case to the issuer, who will grant the final resolution.
The Dispute Process
The process may be lengthy, but we've made it an easy three-step process.

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1. Notification
If the card issuer reaches out to us about a dispute, you will receive notification via email. In the
email, we‘ll provide you with a description of why your customer requested the chargeback and
what the card issuer needs to resolve the case.
2. Your Response
You will have seven days to submit your response to the Information Request Form found in the
notification email and in your Square Dashboard

If you want to return the funds to your customer, select ―No‖ on the first page of the form.

Once we receive your response, we will let the card issuer know and the funds will be returned to
your customer. If you do not respond to the form, we will auto-challenge the case using the
payment information we have on file.

If you would like to challenge your customer’s dispute claim, select ―Yes‖ on the first page of
the form. Then read over the details provided, collect your supporting documentation, and submit
it to us using the form. If we think the card issuer may want more information, we'll reach out.

Once we receive sufficient information from you, we'll submit your case to the card issuer for
review. If you are unable to send us supporting documentation within the response period, we‘ll
review the payment information we have on file and use this to submit a response to the card
issuer.

If your payment dispute qualifies for Square Chargeback Protection, we will confirm this
with you via email. We will cover the entire disputed amount, at no cost to you.

If your payment dispute does not meet the eligibility requirements for Square Chargeback
Protection, we will notify you via email and an immediate hold will be placed on the payment
for the duration of the dispute process. Please note that if the funds are not available in your
Square balance, your linked bank account will be debited to cover the disputed amount.

3. Resolution
It‘s now up to the card issuer to resolve the case. It can take up to 90 days for the issuer to send
us their decision, but we will notify you of the decision as soon as we receive it.

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If the card issuer preliminarily resolves the case in your favor, your customer will be given
the opportunity to re-open the case. If after 60 days your customer has not re-opened the
payment dispute, we will release the deferred funds back to your account. Please note that
disputes may be reopened after 60 days. If this happens we will notify you via email, re-collect
the funds, and request further information.

If the card issuer resolves the case in your customer’s favor, the transaction will be cancelled
and your customer will receive a refund for the disputed amount. This decision is final – Square
can no longer assist you in getting the funds back once this decision has been made.

If you would like to know the status of your case during the resolution process, feel free to email
us. We will be happy to let you know what‘s going on.

Dispute Reversals (Expediting the Process)

If you have been in touch with your customer and are able to come to an agreement outside of
the dispute process, make sure to follow the instructions below as they relate to you.

A. the Funds Need to be Returned to You

At any time during the dispute process, request that your customer contact their bank to cancel
the dispute. Once your customer cancels the dispute, the issuer will send them a confirmation
letter or email. Request that letter from your customer and email it to us as a PDF or JPG
attachment. If the letter confirms that the case has been closed, we will release the payment hold
on your account if there is one.

If you have already sent us your information for the card issuer and are unsure if a
resolution has been reached, please email us to check on the status of your case. Once we
receive the issuer‘s resolution, we can guide you through the next steps.

B. the Funds Need to be Returned to Your Customer

If you are within the 7 day response timeline, please select “No” in your information
request form. Otherwise, contact us to see if we are still within the timeframe to accept the

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dispute. If you do not respond to our request for information we will not automatically returned
to your customer.

If you‘ve come to an agreement with your customer and are still unsure what to do, send us an
email. We'll let you know what steps to take.

Holds on Disputed Funds

When the credit card issuer notifies us of your dispute, they also debit Square‘s account. We let
you know of the dispute right away and also place an immediate hold on the disputed funds by
either withholding funds from your Square balance or debiting your linked bank account.

Although the disputed amount will be held for the duration of the dispute process, we will
release the funds back to you as soon as we receive notice that the dispute has been resolved in
your favor. If the case is resolved in your customer's favor, the held funds will be returned to
your customer.

If we are unable to successfully hold the disputed amount from your Square balance or
from debiting your bank account, your balance will then reflect the negative disputed amount.
Any future payments you take will go towards the outstanding balance.

If the case is resolved in your favor, we will release the deferred amount back to your Square
balance. Your Square balance will be adjusted to reflect the resolution, and any payments that
were withheld will be credited back to your linked bank account.

If the case is resolved in your customer's favor, our Financial Services team will reach out to
you help collect the funds in a manner that works for both you and Square.

Per our Seller Agreement, we are not liable for any overdraft fees you may incur from debits to
your bank account. To prevent any unwanted fees, please be sure to keep sufficient funds in your
linked bank account to cover your largest transaction.

If your dispute qualifies for coverage under Square Chargeback Protection, Square will
cover the dispute for you free of charge – no matter the resolution.

3.4 Preventing Disputes

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While they don't happen often, payment disputes are a risk you take when accepting payment
cards. If you take the following precautions, you'll reduce the likelihood of receiving a dispute
and be prepared in the event that you do receive one.

Take a moment to learn about best practices for accepting payment cards and how to prevent
fraud.

Present Your Refund, Return, and Cancellation Policies on Your Receipts

Write out and present your return, refund, and cancellation policies on your receipts or any other
agreements made at the point of sale. Presenting a no returns/refunds/cancellation sign at the
point of sale is not sufficient to verify your business's policies.
Make the Name on Your Customer's Bank Statements Recognizable
Make sure your business name reflects the type of goods or service you provide. If you don't
have a business name, include your service followed by the name of the city where you provide
your service .Do not use your personal name as your business name. Your customer may not
recognize this name when it appears on their statement.
Communicate with Your Customers
Initiate and maintain open communication channels with your customers with Square Feedback.
Clearly communicate expectations around pricing, sales tax, delivery, and shipping.

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