Managing Customer Debts

This document explains how to manage the company's customer debts, from sending statements of accounts to collection assignments and interest invoices.

Outcome

Use this process to minimize the company's customer losses.

See the documents referred in the See Also section.

Before Starting

Starting conditions specific to certain processes are listed in the respective subordinate process document.

Activity Description

Collecting Customer Debts Using Printed Statements

Collecting Customer Debts involves the following sub-processes:

  1. Creating Statement of Account

    Create an "open item" statement of account to assist the payer in reconciling his/her account ledgers in 'AR Statement of Account. Open' (ARS140).

  2. Creating Payment Advice

    Create a list of open invoice records that are soon due for a payer in 'Payment Advice. Open' (ARS180).

  3. Managing Customer Debts by Reminders

    Use this process to manage both written and verbal payment reminders for past due customer invoices. For written reminders, use 'Payment Reminder. Open' (ARS150). For verbal reminders, automatically select invoices matching your criteria in 'Credit Monitoring. Create Transactions' (RMS410). Review and process the selected invoices in 'Credit Monitoring. Process' (RMS420), and 'Payer. Connect Tickler Note' (RMS440).

  4. Creating Debt Collection Assignment

    Create a collection assignment consisting of past due customer invoices in 'Collection. Open Assignment' (ARS170). The assignment is sent to a collection agency for payment recovery.

  5. Charging Interest

    Bill a payer interest for late payments, calculated from the due date or the invoice date, in 'Interest Invoice. Open' (ARS160).

All these sub-processes are created in a similar way: A proposal is created, verified, and adjusted according to user-defined selection criteria. (In some cases, specific rules and standard texts can be used to simplify the selection and to further tailor the contents of the proposal.) The proposal is then used as a basis when generating the final document.

For legal purposes, post doubtful customer invoice records to a predefined general ledger account in 'Customer Invoice. Process Doubtful' (ARS360)

Managing Allowance for Doubtful Customer Debts

Valuate doubtful accounts to depreciate for both doubtful accounts and for stated customer losses in 'Doubtful Account. Create Allowance' (ARS130).

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