0. Document Control

Document Ownership: Finance Department is the process owner. Any changes require Finance Manager review and GM approval.

1. Purpose

This SOP defines the end‑to‑end process to identify, monitor, escalate, and resolve bad debts for both Short Cash Customers and Company Credit Customers. It is subordinate to the Company Credit Policy and the DoA matrix.

2. Scope

Applies to: Salesmen, Sales Supervisors, Channel Managers, Sales Directors, Accounting (AR), Finance Manager, General Manager, MeM Department, PRO, Legal/Compliance (as required). Covers all overdue invoices under Short Cash and Company Credit.

3. Definitions & Abbreviations

• Overdue Date: The day after invoice due date.
• High‑Risk Case: Exposure with clear risk of loss.
• BDR: Bad Debts Report (>60 days past overdue).
• MeM Department: Custodian of evidence that company assets were removed/transferred after request; maintains logs and proof.
• Aging Buckets: On Due, 0–15, 15–30, 30–60, >60.

4. Roles & Responsibilities (RACI)

5. High‑Risk Notification (Immediate)

6. Monthly Controls & Upfront Monitoring

6.1 Short Cash Statement (Day 1–5)

Issued per salesman; includes invoice‑level details, Days Remaining, and totals per Aging Buckets with amounts & percentages.

6.2 Monthly Outstanding Declaration (Short Cash)

Due by Day 15; lists actions taken, next action date, and risk rating (Annex B).

6.3 Company Credit Dunning

Aligned with Credit Policy checkpoints (Overdue 0, +5, +15, +30, +60); evidence recorded.

7. Timeline & Escalation (by overdue age)

7.1 0–15 Days

• Salesman & Supervisor follow up; document contacts; set next action.

7.2 >15–30 Days

• Open separate case file (ID).
• Mandatory visit by Sales Supervisor & Channel Manager (Annex C‑1).
• Short Cash: Convert to Pure Cash if delay persists; Company: continue dunning and reassess exposure.

7.3 >30–60 Days

• Additional visit by Sales Director & PRO.
• PRO to open police case if applicable; record references.
• Asset removal initiated; MeM evidences transfer (photos/serials/forms/timestamps).

7.4 >60 Days – Bad Debts Report

• Prepare the BDR (Annex A) and submit to Finance Manager & GM.
• If approved → apply KPI Ratio Rate to roles; if rejected → staff disciplinary review.

8. Evidence & Documentation Standards

• Contact logs, emails/messages, signed visit reports, commitment notes, police references.
• MeM asset evidence: photos, serials, handover forms; custody log.
• Naming: [CaseID]_[CustomerCode]_[InvoiceNo]_[YYYYMMDD]_[DocType]; retention: 7 years.

9. Bad Debts Report – Content & Approvals

1. Customer master & contacts
2. Relationship start & total purchases
3. Outstanding & aging profile
4. Sales volume trend
5. Chronology (0–15, 15–30, 30–60, >60)
6. Communications & notices
7. MeM evidence & asset status
8. Police references (if any)
9. Risk & recommendation
10. Signatures: Salesman, Supervisor, Channel Manager, Sales Director
11. Approvals: Finance Manager, General Manager

10. Customer Disciplinary Rules

10A. Short Cash

• Breach = Automatic Block
• Delay >15 days ⇒ Convert to Pure Cash
• 3+ violations ⇒ Permanent Cash
• Any invoicing to blocked customer ⇒ DoA approval

10B. Company Credit

• Breach = Automatic/Manual Block
• Reinstatement: Full payment realization + DoA
• Delay >45 days ⇒ DoA for credit continuation
• Any invoicing to blocked customer ⇒ DoA

11. Staff Disciplinary Framework

• Removal of targets/incentives; salary deduction (e.g., up to 1% of customer outstanding), warning, termination; training/probation as needed.

12. Accounting & ECL Interface

Finance to determine provisioning/write‑off per IFRS9 (PD × LGD × EAD). BDR approval triggers provisioning review and entries.

13. Systems, Data & Reports

• ERP fields accurate (due dates, routes, customer codes).
• Flags: Blocked/Manual Block/DoA Sale/BDR Flag.
• Dashboards: aging by salesperson; >60‑day cases; MeM asset recovery status.
• Exports: Monthly Short Cash Statements (Day 1–5).

14. Exceptions & Deviations

Any deviation requires Finance Manager approval and GM notification. Emergency actions allowed to protect assets; record rationale within 24h.

15. Governance & Alignment

This SOP is subordinate to the Credit Policy and DoA. If conflict arises, the master policy prevails. Annual Finance review; interim updates as needed.

Annexes

Annex A – Bad Debts Report (BDR) Template

Section 2 – Account History: Relationship Start | Total Purchases | Avg Monthly Sales | Current Status

Section 3 – Financials: Invoice list (No., Date, Due, Amount, Paid, Outstanding, Bucket) + Totals by bucket

Section 4 – Chronology: 0–15 | 15–30 | 30–60 | >60

Section 5 – Evidence: Emails, messages, visit reports, MeM asset records, police ref.

Section 6 – Risk & Recommendation

Section 7 – Signatures: Salesman | Supervisor | Channel Manager | Sales Director

Section 8 – Approvals: Finance Manager | General Manager

Annex B – Monthly Outstanding Declaration (Short Cash)

Annex C – Visit & Asset Recovery Forms

• C‑1 Visit Report (15–30): date, attendees (Supervisor & Channel Manager), summary, commitment, next date, customer stamp/sign.
• C‑2 Escalation Visit (30–60): date, attendees (Sales Director & PRO), escalation actions, notices served.
• C‑3 Asset Recovery Checklist: asset type, qty, serials, condition, location, MeM photo, handover/collection form, timestamp, MeM verifier.

Annex D – High‑Risk Alert Email Template

Subject: HIGH-RISK COLLECTION – [Customer / Invoice]
Summary of risk, amount, overdue days, last action, next action, support needed.
Attachments: statement & evidence.
Recipients: Accounting, Finance Manager, Sales Director, GM.

Annex F – Blocking & Reinstatement Decision Tree

1. Breach → Block (Short Cash automatic; Company credit auto/manual).
2. New invoicing while blocked → DoA approval only.
3. Reinstatement after full payment (Company Credit requires DoA).
4. Short Cash: >15d delay ⇒ Pure Cash; 3+ violations ⇒ Permanent Cash.

Annex G – RACI Matrix (Detailed)

Annex H – KPI Ratio Rate Transmission

• Once BDR is approved, Accounting notifies HR/BI to post KPI Ratio Rate against: Salesman, Supervisor, Channel Manager, Sales Director.
• If rejected, HR/BI stands by for GM‑approved staff disciplinary instruction.

Annex I – Dunning Timeline (Company Credit Alignment)

• Overdue 0: courtesy reminder.
• +5: written reminder.
• +15: firm reminder, visit scheduled.
• +30: escalation notice; potential Manual Block; Director involvement.
• +60: BDR preparation and submission.

Annex J – Sample Formal Notice (30–60 Stage)

Formal letter including amount due, invoice refs, deadline, intention to open police case (if applicable), and asset removal clause; delivery proof retained.

Compliance Statement

This SOP is subordinate to the Credit Policy and the DoA. No step herein may contradict the master policy. Where ambiguity exists, escalate to Finance Manager and GM for direction.

© Finance Department · This page is subordinate to the Company Credit Policy and DoA.