My company just bought a small company that was in Bankruptcy. The CFO wants me to head up the credit function. There are no people to do credit right now at the current company and there is not a lot of receivables.
Has anybody established the credit function for an acquired company and if so, what did it entail?
Just looking for things to consider.
Good luck.
We pulled everything in-house as opposed to a new satellite location for credit for this business.
Good luck. Hope this helps.
We brought the A/R in-house. Whoever was handling the credit function of the parent company (me) took over the A/R-credit function of the new company. It was much easier to incorporate in our dept. and I had full visibility of the day-to-day activity.
We segregated the new company so we could monitor sales, DSO, etc. That was years ago and we basically had to do everything manually. With the development of the computer, it would be much simpler now.
The other issue would be cash applications. We will not have them up and running on our system for possibly 6 months. Some of the customers they have overlap with ours so I can see customers paying invoices for both entities on one check which will create an issue.
What would be the best way to keep everything clean, until we transition systems? I would think we would have a person apply checks at that location and provide a list of everything paid that day to me, so I can keep track.
We are dealing with something similar with a recent acquisition from a cash application standpoint. We have some locations acquired on our system and some still on their old system so will on occasion receive payments that pay for AR on both systems. We set it up so that the person handling payments at the acquired location deposits the money and posts to the AR open in their system. The total of the rest of the AR that will need to be posted in our system is applied to an intercompany account we had them set up, just leaving as a credit. Then the payment and list of invoices is provided to us and our cash application department clears the AR on our system using a specific GL set up for these types of payments through our accounting department – so in theory the GL will balance. Definitely not the most ideal process but seems to be working out ok
Thanks to all for the help on this.