Electronics Limited Energypac Electronics Novo Tower, 270 Tejgaon I/A, Dhaka-1208 Bangladesh
Table of conTenT
SL No 01.00 02.00 03.00 04.00 05.00 06.00
06.01 06.02 06.03 06.04 06.05 06.06 06.07 06.08 06.09 06.10 06.11 06.12 06.13
Items
Purpose Policy Statement Factors Involving In Receivable Management Who Should Know this Policy Definition Regulations Classification Rules Customer Assessment Approval of Credit Limit Security of Credit Limit Application for Credit Receivables, Reporting and Its responsibilities Category of Receivables on the basis of Customers VAT & TAX Deduction at sources Deduction from Salary Authentication of Accounts Receivable Allowable Structure for Credit Sales Category of Accounts Receivables Audit of Accounts Receivables Collection through Post Dated Cheque Schedule-I Schedule-II Schedule-III Annexure-I Annexure-II
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Accounts Receivable Management & Credit Policy
2015
Accounts Receivable Management & Credit Policy st
(Enforceable from the 1 day of July, 2015)
01.00 Purpose
A major activity of the Energypac Electronics limited (EELL) is the generation of Revenue through the Sale of goods and services which enhance promote or support its Production, Trading, Project Implementation and Govt. Regulatory functions. Revenue Generated from sales are credited to various departments to support their ongoing operations. The EELL Accounts receivable Management and/or Credit policy has been developed to prescribe the proper methods by which such revenue shall be collected and recognized. ………………............................................................I 02.00 Policy Statement
Revenue generated by the EELL shall be recognized & collected in one of two ways: Cash basis or Accrual Basis. The Cash basis shall be used whenever payment for goods or services is to be received in advance of their provision. If payment is due anytime during or after the provision of goods & services, the accrual basis shall be employed. Variations of this 03.00 Factors involving in Rec eivable management:
The terms of credit granted to customers ; The policies and practices of EELL in determining which customers are to be approved for credit. The paying practices of credit customers. The vigor of the sellers, collection policies and practice. The volume of credit sales. 04.00 Who should know this Policy?
Budget Area Administration Management Personnel Head of the Departments Supervisors 05.00 Definitions
For the purpose of this policy, the terms used are defined as follows: a) “Accounts Receivable” means receivable against all credit sales of goods and services except non trading intercompany transactions.
Electronics Limited
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Accounts Receivable Management & Credit Policy
2015
b) ‘’Benefit’’ amount or product or gift or incentives offered to the sales persons or distributors or dealers or retailers or any other person during various occasions or promotions. c)
“Customer” means a person or any proprietorship organization or any company or local authority or any NGO or GOB department who purchase goods & services form Energypac Electronics Ltd
d) “Credit Sales” includes all sales except cash sales. e) ‘’Credit Limit” a ceiling amount upto which credit sales may be allowed. f) “Due” the date when payment should be received by the company. receivable includes the aggregate amount of unpaid sales. g) “Sales person’’ includes any person directly transect with customers. h) “Immediate Supervisor” is he, who supervises a sales person’s sales accounts. i)
‘’Individual users’’ are who purchase goods directly from the company.
j)
“Retailers” are those groups of customers, who directly purchase goods from the company and sale to final consumers.
k) “Dealer/Distributors” are those groups of customers who are engaged in business with the company under a dealership or distributorship agreement. l)
“Corporate’’ are those group of repeated customers who procures goods or services from the company through Work Order or Purchase Order or under Corporate Agreement/Deal in the “Business to Business” principle.
m) “Inter-company” are companies sister concern under the umbrella of Energypac. n) “Commission” includes commission on sales and collection at different rates at different stages. o) “Enrolled shop” are those shops having business transactions in the company both as present and regular customer. Others are Non-enrolled shop. 06.00 Regulations
Classification: Regulations are classified into two major categories: I. General Sales a) Corporate; b) Retail; c) Distribution; and d) Show room Electronics Limited
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Accounts Receivable Management & Credit Policy
2015
II. Project Sales a) Professional Lighting Engineering & Compliance Audit; b) Renewable Energy; and c) Green Divisions. Rules: 06.01 Customer Assessment:
Before allowing credit sales the concerned sales person will assess the customer and the concerned manager will approve it on the basis of Category of business, Length of Business History, Strength of Solvency, personal integrity & security against credit. (Assessment Form Annexure-I & II) 06.02 Approval of Credit limit:
After assessing the customer, as well as on the basis of recommendation by the immediate supervisor and vetting from Head of Finance & Accounts or Nominated person by him, the concerned person will have to get approval of a credit limit from the management of the company. Credit limit to be restricted in Software and it has to be followed strictly. 06.03 Sec urity of Credit Limit:
Credit limit is allowable upon receipt of any security in the form of: a) A Security Cheque (Verified by the Finance & Accounts Department) b) Irrevocable Bank Guarantee (issued by a scheduled bank) c) Irrevocable Standby Letters of Credit or local LC. 06.04 Application for credit: Every Customer (Retail, Distributor & corporate customer except those are issuing Purchase/Work Order mentioning terms of payment) should approach on letter head pad for enjoying any credit from the company for a specific period. Credit period shall not exceed the period stated in the Schedule-I.
06.05 Receivables, Reporting and its Responsibilities 06.05.01: The Concerned sales person and immediate supervisor will be jointly
responsible for recovering the receivable against every single invoice before the expiry of Credit period allowed.
Electronics Limited
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Accounts Receivable Management & Credit Policy
2015
06.05.02: The Concerned supervisor will report any overdue receivable to the Head of Sales, COO, and Accounts department within 3 (three) working days after expiry of credit period with justification.
06.05.03: Head of Sales will submit an overall receivable aging report with justification within 5 working days to CEO/COO on month closing basis.
06.06 Category of credit on the basis Customers 06.06.01: Retail (Credit against sales directly to shop owners) 06.06.02: Distributors & Dealers (Credit against sales to the customers who are under
dealership/distributorship agreement Corporate (Companies, NGOs, Local authorities & Government Departments) 06.06.03:
06.06.04: Inter-companies (Companies under the umbrella of Energypac) 06.06.02: Individuals users (employees of Energypac group, individual customers,
etc) 06.07 VAT Deduction at Sources & Tax Deduction at Sources:
Following conditions to be met in the case of VAT or TAX deduction at sources: a) Corporate and project division’s customers are only allowed to deduct VAT and TAX against payment; b) Treasury Challan for VDS(VAT Deduction at Sources) must be submitted to the EELL accounts to adjust the amount within 15 days from such deduction; and c) Treasury Challan for TDS(Tax Deduction at Sources) must be submitted to the EELL accounts to adjust the amount within 45 Days from such deduction. 06.08 Deduction from salary:
The management may deduct (if thinks fit), any amount from gross salary, until full settlement, will be deducted to adjust Accounts Receivable from the concerned sales person in case of receivable exceeding 90(sixty) days overdue. For any uncollectible credit then salary, TA/DA, Incentives or any other benefits entitled by the employee to be held up until customer’s confirmation/clearance on such credit.
Electronics Limited
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Accounts Receivable Management & Credit Policy
2015
Allowable Structure for Credit Sales Category of Customers
Credit Limit
Credit Period (days)
Security Required
Approving Authority
N/A
N/A
N/A
N/A
Enrolled shops
30,000/=
Closure of the month
Security Cheque/PDC
Head of Sales
Distributors
50% of monthly sales
Closure of the month
1. Bank Guarantee 2. Post Dated Cheque
COO
Dealer
50% of Proven monthly sales
Half yearly Closure
As per agreement
As per agreement (Maximum of 45 days)
Non enrolled shops
Enrolled Corporate Non Enrolled Corporate & Individual Customers Inter-company
50,000/=
Maximum 21 days
N/A
Maximum 30 days
1. Post dated Cheque 2. Bank Guarantee
COO
1. Post Dated Cheque 2. Bank Guarantee 3. Irrevocable Standby Letters of Credit
COO
1. Post Dated Cheque 2. Bank Guarantee
COO, In special cases CEO may recommend for any credit limit.
Post Dated Cheque
N/A
Category of Receivable Period of Receivable
Status of Receivable
Grade of Receivable
Within allowed Credit Period 1 to 15 days overdue 16 to 30 days overdue 31 to 60 days overdue Overdue above 60 days
Very Good Good Excellent Bad Very bad
A B C D E
Electronics Limited
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Accounts Receivable Management & Credit Policy
2015
Set of documents for creating new customers’ account Sl
Documents
1 02
Trade License VAT Registration Certificate
03 04 05 06 07 08 09 10 11 12 13
TIN Certificate Photographs Bankers’ Certificate & Statement Own Transport list Manpower List Guarantors’ Certificate Business Address Solvency / Credit Facility
Electronics Limited
Status
Comments
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Annexure-I
Assessment Procedures for distributor
Initial Offer to the probable Dealer/Distributor
Written Application to be submitted by Interested Distributor/Dealer
Assessment form to be fill up by the Concern ZSM/RSM and initially it is to be assessed by ZSM/RSM (Schedule-4)
3 months observation period with advance cash business upon approving from Head of Sales and Head of RnD
Recommendation from HOS and HoRnD for distributorship with the current transaction ledger and assessment form
Agreement to be signed by the COO
Annexure-II
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Designation
Decision
Verified By
SE/MO/SMO
□ YES
□ NO
Checked By
AM/DM/RSM
□ YES
□ NO
Recommended By
Head of Sales/R&D
□ YES
□ NO
Approved By
COO
□ YES
□ NO
Name, Signature & Date
