Collections that are forecastable
A clean ageing with owners produces a receipts forecast the cash flow model can rely on, instead of a monthly estimate.
Finance Function
Accounts Receivable (AR) Management
A managed receivables cycle covering credit terms, invoicing accuracy, ageing discipline, a structured collection calendar, dispute resolution and reconciliation of customer TDS credits against Form 26AS and the annual information statement.
Overview
A receivables problem is almost never a collections problem. It is an invoicing, terms and follow-up problem that only becomes visible as cash.
The position most companies arrive in is recognisable. Sales agree terms that were never written into the order. Invoices go out with a purchase order number missing, so the customer’s payables system rejects them silently. Ageing is maintained but nobody owns any bucket in it. Disputes are held in an inbox rather than a register. Receipts arrive without a reference and sit unapplied, making the ageing worse than the reality. Meanwhile the working capital limit is drawn to the margin and the drawing power computation is carrying overdue debtors it should have excluded.
This engagement takes the receivables cycle end to end: what terms are granted, what the invoice must contain, who follows up and when, how a dispute is closed, and how the ledger is reconciled back to cash and to customer TDS credits.
Scope of engagement
Work is scoped against your invoice volume, customer count and the number of billing channels you operate.
Marketplace and payment gateway settlement streams are counted as separate channels for scoping.
- Credit policy written and applied: approval limits by value, terms by customer grade, security or advance where the grade requires it, and a documented exception route
- Customer master review covering GSTIN validation, place of supply, billing contact, portal registration and the purchase order reference each customer requires on the face of the invoice
- Invoice accuracy controls, including e-invoice IRN generation where your aggregate turnover crosses the notified threshold, and correct treatment of credit notes so that the GST adjustment and the ledger agree
- Ageing maintained in fixed buckets with a named owner for each bucket and each escalation step
- Collection calendar: pre-due reminder, due-date confirmation, structured follow-up at defined intervals and a written escalation ladder to management
- Statement of account issued to each significant customer on a fixed cycle, with balance confirmations obtained at half year and year end
- Dispute register capturing the reason, the internal owner, the age and the resolution, with root causes reported monthly rather than only case by case
- Cash application discipline: receipts matched to invoices using UTR and remittance advice, with unapplied receipts aged and cleared
- Reconciliation of TDS deducted by customers against Form 26AS and the annual information statement, and follow-up where a customer has not reported the deduction
- Treatment of tax collected at source under Section 206C(1H) and of buyer deduction under Section 194Q, so that the ledger and the tax position agree
- Marketplace and gateway settlement reconciliation, net of commission, shipping recovery, returns and tax collected at source under Section 52 of the CGST Act
- Provisioning and write-off recommendations against the agreed policy, prepared for your approval
- Debtor data supplied for the monthly book-debt statement and the drawing power computation
Deliverables
- Written credit and collection policy, with the approval matrix
- Cleansed customer master with invoicing requirements recorded per customer
- Ageing report by bucket, by customer and by owner
- DSO trend with the calculation basis stated
- Collection calendar and the follow-up templates used at each stage
- Dispute register with ageing and root cause classification
- Statements of account and balance confirmation control sheet
- Unapplied receipts schedule with clearing status
- TDS credit reconciliation against Form 26AS with the customer follow-up list
- Settlement reconciliation per marketplace or gateway channel
- Monthly receivables pack with collection forecast and commentary
Process
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Diagnostic
We take the ledger, the ageing, twelve months of invoices and receipts, and the current customer master. Overdue balance is split into genuinely unpaid, disputed, unapproved at the customer, and paid but unapplied. That split determines everything after it.
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Clean-up
Unapplied receipts are matched, credit notes are cleared, duplicate and dead customer records are closed, and the ageing is restated so it reflects the real position. Nothing is chased until the number being chased is correct.
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Policy and controls
Credit policy, invoice content requirements, the collection calendar and the escalation ladder are agreed and documented. Owners are named, including on your side.
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Running the cycle
The calendar runs. Follow-ups go out on schedule, disputes are logged and pushed to their internal owner, statements are issued, receipts are applied within the cycle.
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Monthly review
Ageing, DSO, dispute root causes and the TDS credit position are reviewed with you. Recurring dispute causes are routed back to sales, operations or billing, since that is where they originate.
Benefits
Disputes fixed upstream
Classifying dispute causes shows which of them originate in the order, the delivery or the invoice, and sends the fix to the right team.
TDS credits actually claimed
Matching deductions to Form 26AS each quarter recovers credit that would otherwise sit unclaimed and leaves the ledger showing the true balance.
Reliable drawing power
Debtor data prepared on the same basis every month keeps the book-debt statement consistent with the ledger a bank inspection will test it against.
Industries served
Manufacturing brings distributor credit, retention and rate-difference claims. Retail and e-commerce brings marketplace settlement, returns and gateway reconciliation. Technology and SaaS brings subscription billing, renewal dating and overseas receipts with foreign inward remittance documentation. Healthcare brings payer and corporate panel receivables with long approval cycles. Real estate and infrastructure brings milestone billing, retention money and certification-linked collection.
Typical timeline
- Diagnostic and overdue balance split: 5 to 8 business days
- Ledger clean-up and ageing restatement: 2 to 4 weeks, driven by unapplied receipt volume
- Policy, calendar and owners agreed: within the first month
- Collection cycle running to calendar: month two
- First full monthly receivables pack: end of month two
Engagement model
Contracted as a monthly retainer with a minimum term of three months and thirty days written notice on either side. Fees are fixed against the scoped volume and are never a percentage of amounts collected, because a commission model changes which customers get chased and why.
Delivery is virtual, through read and transaction-level access to your accounting system, a shared dispute register and a fixed weekly review call. Customer contact is either handled by your team with our support or carried out under your domain and identity, whichever you choose at the start.
What is not included
- Debt recovery agency work, field collection, and any contact conducted outside your own commercial identity.
- Legal action: demand notices, complaints under Section 138 of the Negotiable Instruments Act, civil suits, arbitration and applications under the Insolvency and Bankruptcy Code. You appoint counsel for these.
- Commercial negotiation with your customers on price, discount, settlement value or extended terms. We prepare the position; the decision and the conversation are yours.
- Custody of receipts. No funds pass through us, and we hold no bank operating rights.
- Write-off or provision decisions. We recommend against the agreed policy; approval is yours and the entry is posted by your team.
- Credit insurance, factoring, bill discounting and invoice financing arrangements.
- Credit bureau reports and third-party credit ratings on your customers, which are procured at cost if you want them.
- Sales invoicing itself, where invoice generation sits inside your billing or ERP workflow.
- Filing of GST returns and TDS returns, and representation before any tax authority on a credit mismatch.
Where an account has broken down beyond commercial follow-up, we say so and stop, rather than continuing a collection cycle that no longer has a purpose.
Frequently asked questions
Only if you ask us to, and only under your own email domain and your own name. Many clients prefer we work behind the line: we prepare statements, drive the calendar, draft the follow-ups and escalate internally, while all customer contact stays with your sales or accounts team. Both models work. What matters is that one of them is chosen deliberately and written into the engagement letter.
No. This is collection discipline inside a live commercial relationship. We do not act as a recovery agent, do not use recovery tactics, and do not take a percentage of amounts collected. Where an account has genuinely broken down and needs a demand notice, a Section 138 complaint or an insolvency application, that is legal work and you appoint counsel for it.
Rarely by chasing harder. In most books the largest blocks of overdue balance are invoices disputed on a purchase order or delivery detail, invoices sitting unapproved in a customer's own workflow, and receipts collected but never applied against an invoice. Each has a different fix. We size the three categories in the diagnostic before promising any movement, because chasing a disputed invoice achieves nothing.
Because customers deduct tax at source and your books often carry the gross invoice while the customer has paid net. If the deduction is never matched to Form 26AS, the balance looks overdue when it is not, and the credit may go unclaimed. We reconcile TDS receivable in your books against 26AS and the annual information statement each quarter and chase customers whose returns have not reported the deduction.
Substantially. Marketplace receivables are settled net of commission, shipping, returns and tax collected at source under Section 52 of the CGST Act. The settlement report, not the invoice, drives the cash. We reconcile settlement files to the sales register and to bank credits, and treat the TCS credit reflected in GSTR-2A as a separate reconciliation stream.
A monthly receivables pack containing the ageing by bucket and by customer, the DSO trend, the collection forecast for the coming period, the dispute register with owners and ages, the TDS credit position, and a short commentary on what moved and why. It is issued on a fixed date each month, agreed at the start.
Related services
- Accounts Payable (AP) Management for the other side of the working capital cycle, including MSME payment discipline.
- Virtual CFO Services where the receivables position needs to feed a full cash forecast and lender pack.
- Data Reconciliation Services for gateway, marketplace and Form 26AS reconciliation carried out as a standalone exercise.