Reminder letters and penalty interest processing

Requirement

Some customers must be reminded to pay outstanding invoices. The penalty interest procedure is not required, but if a company wants to charge interest, it must be done legally.

M3 solution

The credit management process that is supported by M3 consists of these main activities:

  1. An itemized monthly statement is sent to the Accounts Payable department for each customer with unpaid invoices. The statement includes a summary of the total debt that is split into aging buckets.
  2. The statement is followed by one to three reminder letters. These are only sent to customers with unpaid overdue invoices, according to their payment terms.
  3. Then, if still not paid, the total debt owed by a customer is represented by several individual invoices and handed over for legal collection.

    A penalty interest invoice can also be used as part of the collection process. In this case, the invoice or the reminder letter must indicate that interest is calculated from the due date until the payment date.

Using the proposal function, users can list invoices by reminder level, which they can review.

Using reminder categories, users can set minimum amounts, reminder level, fees, interests and up from which level items are sent to a collection proposal. Users can choose to view only open items, all items, and the balance of a connected supplier.

For reminder letters, users can create user-defined texts for preface and postscript by category, with variables for the last payment date.

In this country, most of the features are commonly used, but fees and interests are usually not accounted for, and separate interest invoices are not created.

Configuration guidelines

Program ID Program name Description or comment
CRS165 Number Series. Open

For dunning letters, create a record for the number series type 50 with the number series 1.

For collections, create a record for the number series type 50 with the number series 4.

If interest invoicing is to be used, create a record for the number series type 51 with the number series 1.
CRS465 Payment Reminder Rule. Open Connection with Customer Master.
ARS007 Interest ID. Open Connection with Customer Master.
ARS010 Payment Reminder Rule. Enter Text
ARS080 Interest Invoicing Rule. Enter Text
CRX058 Interest Rate per Date. Open Enter specific interest rate per date
ARS085 Collection. Enter Text
CRS610/K Customer. Open

To include the customer in the payment reminder routine, select the Pmt remind rule check box, and select the relevant payment reminder rule.

If the customer is to be included within the collection routine, select the Collection check box.
Note:  If penalty interest invoicing is valid for the customer, select the Interest rule field and select the applicable interest rule. The interest rules are created in ‘Interest Invoicing Rule. Open’ (CRS460), and the text is specified in ‘Interest Invoicing Rule. Enter Text’ (ARS080).
ARS150 Payment Reminder. Open M3 Proposal with edit and then update.
ARS160 Interest Invoice. Open M3 Proposal with edit and then update.
ARS170 Collection. Open Assignment M3 Proposal with edit and then update.