This accounts receivable policy establishes guidelines relating to receivable management, in particular how and when to reserve a receivable, write-off a receivable and recover a receivable. The objective is to ensure consistency in a company's accounting treatment of receivables.
In this sample, the company's philosophy of receivable management is predicated on the presumption that the overall credit quality of the company’s customer base is good and the likelihood of bad debts is minimal. The respective operating units are to set up a reserve after a specific time period when it is deemed that the collection of an account receivable is in doubt. This method serves to bring focus on the collection of the receivable from the appropriate operating groups.