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Collect outstanding balances

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This article describes features that can help you collect outstanding balances from your customers.

When customer payments are registered and reconciled, the collections process often involves one or more of the following steps to collect outstanding balances. Depending on the way you handle collections in your business, Business Central can help you:

  • Send statements to inform customers about their balances, overdue balances, and the relevant transactions. For example, either open entries or all entries posted in last year/quarter/month or other period. If customers have overdue payments, you can begin by sending the Customer Statement report as a reminder. To learn more, go to Statements.
  • Send reminders (also known as dunning letters or payment requests) to customers to inform them of overdue balances. The reminder can include both overdue and open entries, so the customer is also aware of upcoming due dates. You can also use reminders to calculate finance charges, such as interest or fees and include them on the reminder. You can automate the processes for creating, issuing, and posting reminders. To learn more, go to Reminders.
  • Send finance charge memos to claim interest fees for overdue amounts. Use finance charge memos if you want to debit customers for interest or fees without reminding them of overdue amounts. To learn more, go to Finance Charges.
  • Communicate with customers over the phone or by e-mail regarding overdue balances and manage potential misunderstandings and disputes, or simply to remind customers to balance their accounts in a more direct manner. To learn more, go to Use Copilot for Finance in Outlook to streamline manual collections work.

Use Copilot for Finance in Outlook to streamline manual collections work

Note

Copilot for Finance is currently in preview and available in the United States. It's planned to become generally available in the second half of 2024, at which point pricing information is expected to be published.

When you're communicating with customers via e-mail about outstanding balances, chances are you need to look up customer and invoice related information in Business Central. Copilot for Finance makes this task easier by ensuring that relevant customer data is on hand in Outlook. For example, for an email you received, Copilot for Finance can find the customer through the linked contact and display aged balance information and list outstanding invoices that you can easily attach to a reply. Copilot for Finance in Outlook also lets you:

  • Access and update the Dispute Status and Promise to Pay date on invoices
  • Update contact information
  • Draft e-mail replies with Copilot
  • Attach a statement and invoices directly from Outlook.

To learn more, go to Copilot for Finance and Deployment Guide for Copilot for Finance (preview).

Statements

From the customer card, you can create a statement for customer's transactions with you. Then, you can generate a PDF file and send it to the customer. Alternatively, use the Customer Statement report to send your customers an overview of their business with you.

Tip

If needed, you can send the statement to Excel to make changes.

To send the Customer Statement report

  1. Choose the Lightbulb that opens the Tell Me feature 10. icon, enter Customer Statement, and then choose the related link.
  2. Fill in the fields as necessary. Hover over a field to read a short description.
  3. Under Output Options, select how to send the report to the customer.

Note

If you're 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.

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.

Tip

The information in this article is accurate, however, it describes a mostly manual process. Business Central offers tools that you can use to automate the processes of creating, issuing, and sending reminders. Automating these steps can save you a considerable amount of time spent on collections. To learn more, go to Automate reminders in collections.

Before you can create reminders, you must set up reminder terms and assign them to your customers. For more information, see Set Up Reminder Terms and Levels. To manage accounts receivables, you can set up reminder terms and assign them to customers. Reminder terms let you control how the reminder process works. Each reminder term has a set of reminder levels that you define. Reminder levels include rules about when the reminder will be issued, what fees to charge, and whether to calculate interest. Reminder levels also include a grace period setting that ensures you don't send a reminder for a bill that a customer already paid. The contents of the Finance Charge Terms page 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.

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 Lightbulb that opens the Tell Me feature 0. icon, enter Reminders, and then choose the related link.
  2. On the Reminder page, choose the Create Reminders action.
  3. On the Create Reminders page, fill in the fields to define how and to whom the reminders are created.
  4. Choose the OK button.

To create a reminder manually

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

  1. Choose the Lightbulb that opens the Tell Me feature again 2. 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.

  7. Select the Only Entries with Overdue Amounts check box if you want the reminders to contain only overdue open entries. Only invoices and payments will be shown as these are the entries for which your customers' payments may be overdue.

    Important

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

  8. Choose the OK button.

To replace reminder text

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 Lightbulb that opens the Tell Me feature yet again 3. icon, enter Reminders, and then choose the related link.
  2. Open the relevant reminder, and then choose the Update Reminder Text action.
  3. On the Update Reminder Text page, enter the required level in the Reminder Level field.
  4. Choose the OK button to update the beginning and ending text.

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 page 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 on the Reminder Terms page. This specification determines whether interest and/or additional fees are posted to the customer's account and the general ledger. Setup on the Customer Posting Groups page determines which accounts are posted to.

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

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

  • One entry on the Customer Ledger Entries page
  • 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 GST/HST entries.

  1. Choose the Lightbulb that opens the Tell Me feature also here 4. icon, enter Reminders, and then choose the related link.
  2. Select the relevant reminder, and then choose the Issue action.
  3. On the Issue Reminders page, 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 cancel an issued reminder

If reminders were issued in error, you can cancel them before they are sent out. You can do this either one by one or as a batch.

  1. On the Issued Reminders page, select one or more lines for issued reminders that you want to cancel, and then choose the Cancel action.
  2. On the Cancel Issued Reminders page, fill in the fields as necessary, and then choose the OK button.

Finance charges

When a customer doesn't 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.

Before you can create finance charge memos, you must set up terms. For more information, see Set Up Finance Charge Terms.

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 action 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 is added automatically in the beginning or ending text, the text won't be adjusted if you delete lines. Then you must use the Update Finance Charge Text action.

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 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 Lightbulb that opens the Tell Me feature 2. 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. On the Suggest Finance Charge Memo Lines page, set a filter on the Cust. Ledger Entry FastTab if you want to create finance charge memos only for specific entries.

    Note

    Although they're listed, selecting Payment and Credit Memo as Document Type filters won't have an effect because the Suggest Finance Charge Memo Lines action only handles positive amounts.

  5. Choose the OK button to start the batch job.

To update finance charge memo text

In some cases, you might want to modify the beginning and ending text 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 Lightbulb that opens the Tell Me feature 3. 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. On the Update Finance Charge Text page, you can set a filter if you want to update several memos.
  4. Choose the OK button to update the beginning and ending text.

To issue finance charge memos

After you create finance charge memos and make any needed modifications, you can either print test reports or issue the finance charge memos.

When you issue a reminder, the entries post according to your specifications on the Finance Charge Terms page. This specification determines whether interest and/or additional fees post to the customer's account and the general ledger. Settings on the Customer Posting Groups page determine the accounts that interest or fees post to.

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

If the Post Interest or the Post Additional Fee checkboxes are selected on the Finance Charge Terms page, the following entries are also created:

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

Also, issuing the finance charge memo might result in GST/HST entries.

  1. Choose the Lightbulb that opens the Tell Me feature 4. icon, enter Finance Charge Memos, and then choose the related link.
  2. Select the relevant memo, and then choose the Issue action.
  3. On the Issue Finance Charge Memos page, fill in the fields as necessary.
  4. Choose the OK button.

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

To cancel an issued finance charge memo

If finance charge memos were issued in error, you can cancel them before they're sent out. You can do this either one by one or as a batch.

  1. On the Issued Finance Charge Memos page, select one or more lines for issued finance charge memos that you want to cancel, and then choose the Cancel action.
  2. On the Cancel Issued Fin. Charge Memos page, fill in the fields as necessary, and then choose the OK button.

To view reminder and finance charge entries

When you issue a reminder, a reminder entry is created on the Reminder/Fin. Charge Entries page 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 Lightbulb that opens the Tell Me feature 5. icon, enter Customers, and then choose the related link.
  2. Open the relevant customer card, and then choose the Ledger Entries action.
  3. On the Customer Ledger Entries page, select the line with the ledger entry you want to see the reminder entries for, and then choose the Reminder/Fin. Charge Entries action.

Multiple interest rates

For each finance charge term code, you can specify multiple interest rates so that you can calculate finance charges with multiple interest rates for a specific period. This is helpful if you charge different interest on payments that are late. The interest calculation is the same for each financial charge, with variation only in the rate of interest for a specific period. If multiple interest rates are not set up, then the interest rate and period that is defined in the Finance Charge Terms and Reminder Terms pages for the whole period of calculation will be used. To learn more, go to Set Up Multiple Interest Rates.

See also

Set Up Reminder Terms and Levels
Set Up Finance Charge Terms
Managing Receivables
Sales
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