Accounts receivable management for Philippine B2B companies

Accounts receivable (AR) management is the work of turning sales into cash: setting credit terms, invoicing accurately, getting invoices acknowledged, following up, receiving payment and applying it correctly. For Philippine distributors, manufacturers and service companies selling on terms, AR often holds weeks or months of revenue. Small improvements in collection speed release significant cash.

The AR cycle in Philippine practice

1. Credit approval. New customers are evaluated and given a credit limit and terms.
2. Sales invoice. Issued when goods are delivered or services rendered, following current BIR invoicing rules (EOPT invoicing).
3. Counter receipt. Many corporate customers acknowledge invoices received by issuing a counter receipt, which starts their payment process and gives you a promised payment date.
4. Statement of account (SOA). Periodic summary of open invoices sent to the customer.
5. Follow-up and collection. Reminders and calls before and after due dates (collections process).
6. Payment receipt. Cash, bank transfer or checks, including post-dated checks (PDC management).
7. Payment application. Payment matched to specific invoices; withholding tax certificates (BIR Form 2307) from customers recorded.
8. Receipts and records. Acknowledgment documents issued according to current BIR rules and company policy.

Credit policy essentials

• Credit application with business documents and trade references
• Credit limit based on expected volume and risk
• Terms (for example 30, 60 or 90 days) and any early payment discount
• Hold rules: when orders are blocked because the customer exceeded the limit or has overdue balances
• Review cycle: periodic review of limits based on payment behavior

Customer withholding tax

Corporate customers that are withholding agents may withhold tax from their payments to you and issue BIR Form 2307. AR must record the withheld amount against the invoice and collect the 2307, since it supports your claim of creditable withholding tax. Missing 2307s are a common year-end problem; track them per customer.

AR metrics

Billing accuracy checklist

Customers delay payment when they find any reason to reject an invoice. Before invoices leave, check:

• Customer name, address and TIN match the customer master
• Customer PO number and delivery references are on the invoice
• Prices and discounts match the agreed price list or contract
• Quantities match the signed delivery receipt
• VAT and other taxes are computed correctly
• Required attachments (delivery receipts, service reports) are complete

A rejected invoice can cost weeks, because it restarts the customer's processing cycle.

Common causes of slow collection

• Invoices with errors (wrong price, PO number or address) that customers reject
• Invoices delivered late or never acknowledged
• No counter receipt follow-up, so nobody knows the promised date
• Sales and finance not coordinating on overdue accounts
• PDCs not deposited on their dates

Controls

• Separate the people who issue invoices, receive payments and record adjustments
• Approve credit memos and write-offs above set amounts
• Reconcile AR subsidiary ledger to the general ledger monthly
• Deposit collections intact and promptly

Where Cirquolus fits

Cirquolus Accounts receivable handles sales invoices and counter receipts, payment entries and official receipts, customer aging and statements of account, post-dated checks, commissions and reports. Customer aging supports collection follow-up, and financial management connects AR to journals and financial statements.

Frequently asked questions

What is a counter receipt?

A document a customer issues to acknowledge receipt of your invoices for processing. It usually indicates when payment can be collected.

What is a statement of account?

A summary of a customer's open invoices, payments and balance, sent periodically to prompt payment and reconcile balances.

How do you reduce days sales outstanding?

Invoice correctly and promptly, secure counter receipts, follow up before due dates, enforce credit holds and deposit PDCs on time.

Why do customers withhold tax from payments?

Customers that are withholding agents must withhold creditable tax from certain payments and give you BIR Form 2307, which you use to claim the tax credit.