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Process collection letters example

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This article goes through an example that shows the process of creating, printing, and posting collection letters. The example is based on the Ignore payments and credit memos when calculating collection letter code option in Credit and collections. It uses data in the USMF demo company and a new customer, US-045.

To begin, go to Accounts receivable > Customers > All customers, select New, and enter the required information to create customer US-045.

When you've finished, follow these steps.

  1. Go to Credit and collections > Collection letter > Setup collection letter sequence, and set up the collection letter sequence as shown in the following table that is assigned to the customer posting profile.
Collection letter code Description Currency Main account Fee in currency Minimum over Days Block
Collection letter 1 First notification USD 0.00 0.00 2
Collection letter 2 Second notification with fee USD 403150 20.00 10.00 3
Collection Final notification with fee USD 403150 50.00 100.00 15

The following illustration shows the information that's in the table as it would appear on the Collection letters page.

Setting up a collection letter sequence.

You must now set the two parameters that are required for this example.

  1. Go to Credit and collections > Setup > Accounts receivable parameters, and follow these steps:

    1. On the Collections tab, set the Ignore payments and credit memos when calculating collection letter code option to Yes.
    2. Make sure that the Create collection letter per field is set to Customer.

    Setting Accounts receivable parameters for Credit collections.

  2. Go to Accounts receivable > Invoices > All free text invoices, select New, and then follow these steps:

    1. In the Customer account field, select US-045.
    2. In the Invoice date field, enter 1/15/2021.
    3. In the Due date field, enter 1/16/2021.
    4. On the Invoice lines FastTab, in the Main account field, enter 401100.
    5. In the Unit price field, enter 500.00.
    6. Select Post.

    You must now enter two credit notes for the customer.

  3. Select New, and then follow these steps:

    1. In the Customer account field, select US-045.
    2. In the Invoice date field, enter 1/15/2021.
    3. In the Due date field, enter 1/16/2021.
    4. On the Invoice lines FastTab, in the Main account field, enter 401100.
    5. In the Unit price field, enter -100.00.
    6. Select Post.

  4. Repeat step 4, but enter -200.00 in the Unit price field.

  5. Go to Accounts receivable > Customers > All customers, and select customer US-045. On the Action Pane, select Transactions > Transactions to review the customer transactions that you posted earlier.

    Reviewing the posted customer transactions.

    You must now create collection letters for customer US-045.

  6. Go to Credit and collections > Collection letter > Create collection letters, and follow these steps:

    1. Set the Invoice and Credit note options to Yes.

      By default, the Collection letter field should be set to Collection per customer.

    2. In the Collection letter date field, enter 1/19/2021.

    3. On the Records to include FastTab, select Filter, and, in the Customer account field, add customer US-045.

    4. Select OK.

    5. Select OK to create collection letters.

  7. Go to Credit and collections > Collection letter > Review and process collection letters, and follow these steps:

    1. Notice that the collection letter code on both the header and the transaction lines is Collection letter 1, because this collection letter is the first collection letter in the sequence. (To view the transaction lines, you might have to select the Transactions FastTab.)

    Verifying that the same collection letter code appears on the header and the lines.

    1. On the Action Pane, select Post.
    2. In the Posting date field, enter 1/19/2021.

    You must now create collection letters again for customer US-045.

  8. Go to Credit and collections > Collection letter > Create collection letters, and follow these steps:

    1. Set the Invoice and Credit note options to Yes.

      By default, the Collection letter field should be set to Collection per customer.

    2. In the Collection letter date field, enter 1/23/2021.

    3. On the Records to include FastTab, select Filter, and in the Customer account field, add customer US-045.

    4. Select OK.

    5. Select OK to create collection letters.

  9. Go to Credit and collections > Collection letter > Review and process collection letters, and follow these steps:

    1. Notice that the collection letter code on the header is Collection letter 1. However, the code on the transaction lines is Collection letter 2.

Verifies that different collection letter codes appear on the header and the lines.

The codes differ because the Ignore payments and credit memos when calculating collection letter code option is to Yes.

  1. Don't post this collection letter.

  2. Go to Credit and collections > Setup > Accounts receivable parameters, and on the Collections tab, set the Ignore payments and credit memos when calculating collection letter code option to No.

    Setting the Ignore payments and credit memos when calculating collection letter code option to No.

    You must now create collection letters again for customer US-045.

  3. Go to Credit and collections > Collection letter > Create collection letters, and follow these steps:

    1. Set the Invoice and Credit note options to Yes.

      By default, the Collection letter field should be set to Collection per customer.

    2. In the Collection letter date field, enter 1/23/2021.

    3. On the Records to include FastTab, select Filter, and then, in the Customer account field, add customer US-045.

    4. Select OK.

    5. Select OK to create collection letters.

  4. Go to Credit and collections > Collection letter > Review and process collection letters, and notice that the collection letter code on both the header and the transaction lines is Collection letter 2.

    Showing again that the same collection letter code appears on the header and the lines.

    The same code appears in both places because the Ignore payments and credit memos when calculating collection letter code option is now set to No.