How to: Collect Outstanding Balances

Managing receivables includes checking whether amounts due are paid on time. If customers have overdue payments, you can begin by sending the Customer Statement report as a reminder. Alternatively, you can issue reminders.

You can use reminders to remind customers about overdue amounts. You can also use reminders to calculate finance charges, such as interest or fees and include them on the reminder. Use finance charge memos if you want to debit customers for interest or fees without reminding them of overdue amounts.

Reminders

Before you can create reminders, you must set up reminder terms and assign them to your customers. Each reminder term has predefined reminder levels. Each reminder level includes rules about when the reminder will be issued, for example, how many days after the invoice due date or the date of the previous reminder. The contents of the Finance Charge Terms window determines whether interest is calculated on the reminder.

You can periodically run the Create Reminders batch job to create reminders for all customers with overdue balances, or you can manually create a reminder for a specific customer and have the lines calculated and filled in automatically.

After you create the reminders, you can modify them. The text that appears at the beginning and end of a reminder is determined by the reminder level terms, and can be seen in the Description column. If a calculated amount has been inserted automatically in the beginning or ending text, the text will not be adjusted if you delete lines. Then you must use the Update Reminder Text function.

A customer ledger entry with the On Hold field filled in will not prompt the creation of a reminder. However, if a reminder is created on the basis of another entry, an overdue entry marked on hold will also be included on the reminder. Interest is not calculated on lines with these entries.

After you have created reminders and made any needed modifications, you can either print test reports or issue the reminders, typically as email.

Finance Charges

When a customer does not pay by the due date, you can have finance charges calculated automatically and add them to the overdue amounts on the customer's account. You can inform customers of the added charges by sending finance charge memos.

Note

You use finance charge memos to calculate interest and finance charges and to inform your customers about interest and finance charges without reminding them of overdue payments. Alternatively, you can calculate interest on overdue payments when you create reminders.

You can manually create a finance charge memo for an individual customer, and fill in the lines automatically. Alternatively, you can use the Create Finance Charge Memos function job to create finance charge memos for all or selected customers with overdue balances.

After you create the finance charge memos, you can modify them. The text that appears at the beginning and end of the finance charge memo is determined by the finance charge terms, and can be seen in the Description column on the lines. If a calculated amount has been inserted automatically in the beginning or ending text, the text will not be adjusted if you delete lines. Then you must use the Update Finance Charge Text function.

After you have created finance charge memos and made any needed modifications, you can either print test reports or issue the finance charge memos, typically as email.

To send the Customer Statement report

  1. Choose the Search for Page or Report icon, enter Customer Statement, and then choose the related link.
  2. Fill in the fields as necessary. Choose a field to read a short description of the field or link to more information.
  3. Under Output Options, select how to send the report to the customer.
Note

If you are using multiple currencies, the Customer Statement report is always printed in the customer's currency. The last date in a statement period is also used as the statement date and the aging date, if aging is included.

To set up reminder terms

If customers have overdue payments, you must decide when and how to send them a reminder. In addition, you may want to debit their accounts for interest or fees. You can set up any number of reminder terms. For each reminder terms code, you can define an unlimited number of reminder levels.

  1. Choose the Search for Page or Report icon, enter Reminder Terms, and then choose the related link.
  2. Fill in the fields as necessary.
  3. To use more than one combination of reminder terms, set up a code for each one.

To set up reminder levels

The first time a reminder is created for a customer, the setting from level 1 is used. When the reminder is issued, the level number is registered on the reminder entries that are created and linked to the individual customer ledger entries. If it is necessary to remind the customer again, all reminder entries linked to open customer ledger entries are checked to locate the highest level number. The conditions from the next level number will then be used for the new reminder.

If you create more reminders than you have defined levels for, the conditions for the highest level will be used. You can create as many reminders as are allowed by the Max. No of Reminders field in the reminder terms.

  1. Choose the Search for Page or Report icon, enter Reminder Terms, and then choose the related link.
  2. In the Reminder Terms window, select the line with the terms you want to set up levels for, and then choose Levels action.
  3. Fill in the fields as necessary.

    For each reminder level, you can specify individual conditions, which can include additional fees in both LCY and in foreign currency. You can define many additional fees in foreign currencies for each code in the Reminder Levels window.

  4. Choose the Currencies action.
  5. In the Currencies for Reminder Levels window, define for each reminder level code and corresponding reminder level number a currency code and an additional fee.

    Note

    When you create reminders in a foreign currency, the foreign currency conditions that you set up here will be used to create reminders. If there are no foreign currency reminder conditions set up, the LCY reminder conditions that are set up in the Reminder Levels window will be used and then converted to the relevant currency.

    For each reminder level, you can specify text that will be printed before (Beginning Text) or after (Ending Text) on the entries on the reminder.

  6. Choose the Beginning Text or Ending Text actions respectively, and fill in the Reminder Text window.

  7. To automatically insert related values in the resulting reminder text, enter the following placeholders in the Text field.
Placeholder Value
%1 Content of the Document Date field on the reminder header
%2 Content of the Due Date field on the reminder header
%3 Content of the Interest Rate field on the related finance charge terms
%4 Content of the Remaining Amount field on the reminder header
%5 Content of the Interest Amount field on the reminder header
%6 Content of the Additional Fee field on the reminder header
%7 The total amount of the reminder
%8 Content of the Reminder Level field on the reminder header
%9 Content of the Currency Code field on the reminder header
%10 Content of the Posting Date field on the reminder header
%11 The company name
%12 Content of the Add. Fee per Line field on the reminder header

For example, if you write You owe %9 %7 due on %2., then the resulting reminder will contain the following text: You owe USD 1.200,50 due on 02-02-2014..

After you have set up the reminder terms, with additional levels and text, enter one of the codes on each of the customer cards. For more information, see How to: Register New Customers.

To create a reminder automatically

A reminder is similar to an invoice. When you create a reminder, a reminder header as well as one or more reminder lines must be filled in. You can use a function to create reminders for all customers automatically.

  1. Choose the Search for Page or Report icon, enter Reminders, and then choose the related link.
  2. In the Reminder window, choose the Create Reminders action.
  3. In the Create Reminders window, fill in the fields to define how and to whom the reminders are created.
  4. Choose the OK button.

To create a reminder manually

In the Reminder window, you can fill in the General FastTab manually and then have the lines filled in automatically.

  1. Choose the Search for Page or Report icon, enter Reminders, and then choose the related link.
  2. Choose the New action.
  3. On the General FastTab, fill in the fields as necessary.
  4. Choose the Suggest Reminder Lines action.
  5. In the Suggest Reminder Lines batch job, fill in the fields to define how and to whom the reminders are created.
  6. Select the Include Entries On Hold check box if you want the reminders to contain overdue open entries that are on hold.

    Important

    Open entries that are on hold will be inserted, irrespective of the setting in the Only Entries with Overdue Amounts check box.

  7. Choose the OK button.

To replace reminder texts

There are several ways you can determine the text that appears on the printed reminder. In some cases, you may want to replace the beginning and ending texts that have been defined for the current level with those from a different level.

  1. Choose the Search for Page or Report icon, enter Reminders, and then choose the related link.
  2. Open the relevant reminder, and then choose the Update Reminder Text action.
  3. In the Update Reminder Text window, enter the required level in the Reminder Level field.
  4. Choose the OK button to update the beginning and ending texts.

To issue a reminder

After you have created reminders and made any needed modifications, you can either print test reports or issue the reminders.

When you issue a reminder, the data is transferred to a separate window for issued reminders. At the same time, reminder entries are posted. If interest or an additional fee has been calculated, entries are posted to the customer ledger and the general ledger.

When a reminder is issued, the entries are posted according to your specifications in the Reminder Terms window. This specification determines whether interest and/or additional fees are posted to the customer's account and the general ledger. Setup in the Customer Posting Groups window determines which accounts are posted to.

For each customer ledger entry on the finance charge memo, an entry is created in the Reminder/Fin. Charge Entries window.

If the Post Interest or the Post Additional Fee check boxes are selected in the Reminder Terms window, then the following entries are also created:

  • One entry in the Cust. Ledger Entries window
  • One receivables entry in the relevant G/L account
  • One interest and/or one additional fee entry in the relevant G/L account

In addition, issuing the reminder may result in VAT entries.

  1. Choose the Search for Page or Report icon, enter Reminders, and then choose the related link.
  2. Select the relevant reminder, and then choose the Issue action.
  3. In the Issue Reminders window, fill in the fields as necessary.
  4. Choose the OK button

The reminder is either printed for sent to an specified email as a PDF attachment.

To set up finance charge terms

You must set up a code representing each finance charge calculation. Then you can enter this code in the Fin. Charge Terms Code field on customer or vendor cards.

Finance charges can be calculated using either the average daily balance method or the balance due method.

With the balance due method, the finance charge is simply a percentage of the overdue amount:

Balance Due method - Finance Charge = Overdue Amount x (Interest Rate / 100)

With the average daily balance method, the number of days the payment is overdue is taken into account:

Average Daily Balance method - Finance Charge = Overdue Amount x (Days Overdue / Interest Period) x (Interest Rate/100)

In addition, each code in the Finance Charge Terms table is linked to a subtable, the Finance Charge Text table. For each set of finance charge terms, you can define a beginning and/or an ending text to be included on the finance charge memo.

  1. Choose the Search for Page or Report icon, enter Finance Charge Terms, and then choose the related link.
  2. Fill in the fields as necessary.
  3. To use more than one combination of finance charge terms, set up a code for each one.

    For each finance charge term, you can specify individual conditions, which can include additional fees in both LCY and in foreign currency. You can define many additional fees in foreign currencies for each code in the Finance Charge Terms window.

  4. Choose the Currencies action.
  5. In the Currencies for Fin. Chrg. Terms window, define for each term a currency code and an additional fee.

    Note

    When you create finance charges in a foreign currency, the foreign currency conditions that you set up here will be used to create finance charge memos. If there are no foreign currency finance charge conditions set up, then the LCY finance charge conditions that are set up in the Finance Charge Terms window will be used and then converted to the relevant currency.

    For each finance charge term, you can specify text that will be printed before (Beginning Text) or after (Ending Text) on the entries on the finance charge memo.

  6. Choose the Beginning Text or Ending Text actions respectively, and fill in the Finance Charge Text window.
  7. To automatically insert related values in the resulting finance charge text, enter the following placeholders in the Text field.
Placeholder Value
%1 Content of the Document Date field on the finance charge memo header
%2 Content of the Due Date field on the finance charge memo header
%3 Content of the Interest Rate field on the related finance charge terms
%4 Content of the Remaining Amount field on the finance charge memo header
%5 Content of the Interest Amount field on the finance charge memo header
%6 Content of the Additional Fee field on the finance charge memo header
%7 The total amount of the reminder
%8 Content of the Currency Code field on the finance charge memo header
%9 Content of the Posting Date field on the finance charge memo header

To create a finance charge memo manually

A finance charge memo is similar to an invoice. You can fill in a header manually and have the lines filled in for you, or you can create finance charge memos for all customers automatically.

  1. Choose the Search for Page or Report icon, enter Finance Charge Memos, and then choose the related link.
  2. Choose the New action, and then fill in the fields as necessary.
  3. Choose Suggest Fin. Charge Memo Lines action.
  4. In the Suggest Finance Charge Memo Lines window, set a filter on the Cust. Ledger Entry FastTab if you want to create finance charge memos only for specific entries.
  5. Choose the OK button to start the batch job.

To update finance charge memo texts

In some cases, you may want to modify the beginning and ending text that you have set up for the finance charge terms. If you do this at a time when you have created, but not yet issued, finance charge memos, you can update the memos with the modified text.

  1. Choose the Search for Page or Report icon, enter Finance Charge Memo, and then choose the related link.
  2. open the finance charge memo that you want to change text for, and then choose the Update Finance Charge Text action.
  3. In the Update Finance Charge Text window, you can set a filter if you want to update several memos.
  4. Choose the OK button to update the beginning and ending texts.

To issue finance charge memos

After you have created finance charge memos and made any needed modifications, you can either print test reports or issue the finance charge memos.

When a reminder is issued, the entries are posted according to your specifications in the Finance Charge Terms window. This specification determines whether interest and/or additional fees are posted to the customer's account and the general ledger. Setup in the Customer Posting Groups window determines which accounts are posted to.

For each customer ledger entry on the finance charge memo, an entry is created in the Reminder/Fin. Charge Entries window.

If the Post Interest or the Post Additional Fee check boxes are selected in the Finance Charge Terms window, then the following entries are also created:

  • One entry in the Cust. Ledger Entries window
  • One receivables entry in the relevant G/L account
  • One interest and/or one additional fee entry in the relevant G/L account

In addition, issuing the finance charge memo may result in VAT entries.

  1. Choose the Search for Page or Report icon, enter Finance Charge Memos, and then choose the related link.
  2. Select the relevant memo, and then choose the Issue action.
  3. In the Issue Finance Charge Memos window, fill in the fields as necessary.
  4. Choose the OK button

The finance charge memo is either printed for sent to an specified email as a PDF attachment.

To view reminder and finance charge entries

When you issue a reminder, a reminder entry is created in the Reminder/Fin. Charge Entries window for each reminder line that contains a customer ledger entry. You can then get an overview of the created reminder entries for a specific customer.

  1. Choose the Search for Page or Report icon, enter Customers, and then choose the related link.
  2. Open the relevant customer card, and then choose the Ledger Entries action.
  3. In the Customer Ledger Entries window, select the line with the ledger entry you want to see the reminder entries for, and then choose the Reminder/Fin. Charge Entries action.

See Also

Managing Receivables
Sales
Working with Financials