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Tuesday, September 29, 2020
Canada accounts receivable outsourcing
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Canada accounts receivable outsourcing
For some US companies Canada is a new market and they outsource their accounts receivable. Like any expansion, accounts receivable or AR outsourcing can bolster market penetration, while creating an additional revenue stream. However, an ounce of prevention is worth a pound of cure, is accurate when setting up an accounts receivable department for Canada to support sales and operations.

With 10 provinces and 3 Territories Canada has diverse provincial financial regulations when it comes to extending credit. AR outsourcing or accounts receivable management often eliminates costly headaches like a credit contract or agreement in one province that is void in another province. In some provinces a personal guarantee has to be notarized, while in others it only needs to be clearly identified as a personal guarantee. Depending on the creditor industry a whole spectrum of other factors can enter the picture. Outsourcing to someone who knows the terrain is critical and the main reason US companies outsource their Canadian account receivables.

Some American companies have operated in Canada for decades. With the economic climate in the United States a recent trend has been to centralize accounts receivable systems. Instead of maintaining a physical AR management operation, outsourcing is often the most cost effective way to maintain margins while maintaining efficient sales and operations support in Canada. Proper outsourcing uses industry-specific methodologies and practices to streamline your credit approval initiatives while improving your cash flow and limiting bad debt exposure

Even though every outsourcing project is different the company handling your accounts receivables should have expertise in the following areas:
  1. Setting a detailed credit approval system
  2. Credit adjudication of potential and existing customers
  3. Establishment of credit policies and terms
  4. Prompt Invoicing
  5. Account reconciliations
  6. Cash posting
  7. Development of reminder procedures for slow-payers
  8. Bad debt follow up
  9. Implementation of credit hold policies
  10. Hiring & termination of credit staff
  11. Management & ongoing training of credit staff
  12. Risk management
  13. Documented Policy & Procedure compliance manuals (ISO, Sarbanes Oxley)
  14. Training of sales staff on credit policy.
  15. Fraud management protocols
  16. Shared Services Concept

The outsourcing information above merely scratches the surface. If you have any questions or need more information, don't be afraid to ask. Simply click on the $ and choose your contact option 
Did you know?
  • In the Yukon a collection agency must obtain a collection agency license in the Yukon under a specific name. It is illegal for a collection agency or a collector to communicate with a debtor in the Yukon using another name. This means it is illegal for a collector to inform a debtor or anyone else that he is calling from a law firm, the creditor, or some government agency.

  • In the Northwest Territories a collection agency is permitted to contact a debtor's employer once a year to confirm the debtor's employment, title, and business address.

  • In the Northwest Territories a collection agency cannot state an intention to sue a debtor unless it has express written authority to sue the debtor, and a collection agency cannot recommend to a creditor that a lawsuit be commenced for the purpose of collecting a debt unless the collection agency first notifies the debtor of the collection agency's decision to make this recommendation.

  • In the Province of British Columbia (BC) a personal guarantee on a credit application MUST be clearly identified as a personal guarantee to be valid

  • In Manitoba a collection agency is not permitted to use any form, including any generic collection letter that the Manitoba licensing administrator deems unacceptable.

Did you know?
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