Chasing Overdue Accounts

An invoice is 40 days old on 30-day terms, nobody has phoned the customer, and nothing in BigLedger has flagged it. That is normal: BigLedger sends no reminders and does nothing about lateness by itself. By the end of this guide you will have a weekly collections routine: a list of who to chase, in order; statements that reach the right inbox; a record of what each customer promised; and a way to tell at the end of the month whether the chasing worked. Setting it up takes about an hour. After that it is about thirty minutes every Monday.

Meet GadgetSphere

GadgetSphere Distribution Sdn Bhd (GSD) has about 180 corporate customers on account, most on Net 30. The retail company (GS) has about forty trade accounts for accessories. The two companies share many customers. On a typical Monday, GSD has about RM 1.4 million outstanding, of which roughly RM 310,000 is past its due date.

The finance manager’s target is that nothing is more than 60 days old without a named reason.

What BigLedger does about lateness, and what it leaves to you

A payment term does two things in BigLedger. It sets the due date on an invoice when the invoice is raised, and the ageing reports use that due date. That is all. It does not warn, block, remind, charge interest or put anybody on stop. The background job that looks like it would stop late payers never flags anyone for lateness (see Stopping Supply to a Customer).

So every part of collections is a person’s job:

The job	Who does it	When	How they know they got it right
Deciding who to chase, in what order	The credit controller	Every Monday, from the ageing (Step 1)	Every account past due has a next action and a date
The first reminder	The credit controller or the account’s salesperson	The week an invoice passes its due date	The customer confirms the invoice is received and approved for payment
Statements	The credit controller	Monthly, after month-end closing	Every credit customer is on the run’s lines, and none came back undelivered (Step 3)
The escalation: phone call, letter, stop	The credit controller, with the finance manager at the stop	At 30, 45 and 60 days past due (your ladder, Step 4)	The same account is not at the same step two weeks running
Writing off what will never be paid	The finance manager	At the quarter’s review	The write-off is approved, and the credit note that does it is on the customer’s account

Before you start

You can run the Debtor Report for every company in the group, and open the Statement of Account applet.
Receipts are applied to invoices. A payment recorded without a contra against the invoice it pays leaves that invoice looking unpaid on every report below, and you will chase a customer who has already paid. If your team does not apply receipts routinely, fix that first (Credit Sales Workflow, Step 6).
Each credit customer has an e-mail address on their record that reaches their accounts payable team, not their buyer.

Step 1: Build Monday’s list from the ageing

The outcome: a list of who owes what past due, oldest first, across the group.

Finance > Debtor Report > Aging Report

Select every company, leave Outstanding Only ticked, and search. Each customer is one group, with the buckets across. Sort by the oldest bucket and work down.

For the detail, open the Outstanding Document Report. Rows past their due date are shown in red, with a Due Date and an Aging column. That is your call list: one row per invoice, with the reference the customer’s accounts team will ask for.

Two things about where these numbers come from:

They are built from documents, not from the ledger. Each figure is the open balance on the invoice itself, reduced by the receipts, credit notes and contras applied to it. If a customer says they paid and the invoice is still open, the question is whether the receipt was applied to that invoice, not whether the ledger is wrong.
“As of today” and “as at month-end” are different reports. The Aging and Outstanding Document reports show documents as they stand now. The two Historical reports show the position frozen at the end of a chosen month. A contra or a back-dated receipt can make the two disagree, and sometimes a settled document keeps appearing in the historical view. If it does, see Knocked off, but the balance hasn’t changed.

Step 2: Chase in order, and write down every promise

The outcome: every overdue account has a next action and a date.

For each customer on the list, most-overdue first:

Check it is really owed. Open the invoice, confirm no receipt is waiting to be applied, and confirm no credit note was agreed and not raised.
Contact the person who pays, not the person who buys. Quote the invoice number and the customer’s own PO reference from the invoice.
Ask for a date and an amount, not a promise to “look into it”.
Write it down. BigLedger has no promise-to-pay record and no collection notes against an invoice. Keep your collections log where the finance manager can read it, one line per contact: date, customer, invoices, who you spoke to, what they promised, and your next action date. A spreadsheet is fine. For a customer where the promise matters to the order desk, put it in the customer’s Alert Message too, so it appears on every new order and invoice for them:

Promised RM 38,000 by 30 Sep (spoke to AP, 23 Sep). Check before releasing new orders.

Next Monday, start with every promise that was due last week. A broken promise is the strongest signal you will get, and it is the point at which the escalation ladder moves up a step.

Step 3: Send statements that arrive

The outcome: every credit customer receives a statement each month, at an address that reaches their accounts payable team.

Statement of Account > Statement Of Account Runs > +

Before the first run, fix the one thing that silently leaves customers out. A statement run can only choose customers by customer category or by sales agent. There is no “all customers” option. A customer with no category, and no default sales agent in the selection, is never on the run.

So give every credit customer a category you control. GadgetSphere uses one called Monthly statement. Then create the run:

Statement Type: Aging for a collections statement.
Run Type: Email.
Companies: all the companies that sell on credit. The run makes one statement per company per customer, so a customer who owes both GSD and GS gets two statements, each from the right company.
Customer Category: Monthly statement.
Recipient check boxes: choose which of the customer’s stored addresses to use (main e-mail, address contacts, staff contacts, login e-mails). All five start ticked. If the buyer’s address is stored as a contact, the statement goes to them too.
Email All Outstanding Docs: tick this for customers who always say “please resend the invoice”. It attaches every open document.

Press Run, then open the Lines tab. Count the lines against your list of credit customers. A customer missing from the lines has no category or no finalised document for that company. Also check the recipients on each line: an invalid e-mail address is dropped without any message, so a line with no recipient is a statement nobody received.

Create each month’s run by hand. The applet also offers scheduled, recurring runs. As shipped, a scheduled run produces no lines and records no failure, so it looks as if nothing was due. Until that changes, a statement that was not created by a person was not sent.

Step 4: Escalate on a ladder you wrote down in advance

The outcome: the same account never sits at the same step for two weeks, and the step after that is already agreed.

BigLedger has no reminder letters and no automatic escalation, so the ladder is yours. Write it once, agree it with the finance manager and the sales manager, and follow it. GadgetSphere’s is:

Days past due	Action	Who
1–14	E-mail with the invoice and the statement	Credit controller
15–30	Phone call to their accounts payable team; promise logged	Credit controller
31–45	Salesperson calls the buyer; new orders held until a promise is kept (Deciding on Credit)	Salesperson, briefed by credit control
46–60	Formal letter; the customer is warned of a stop	Credit controller, signed by the finance manager
Over 60	Stop supply (Stopping Supply to a Customer)	Credit controller, agreed with the finance manager
Over 90	Letter of demand, or referral to a collection agent or lawyer	Finance manager

Charging interest on late payment. If your terms and conditions allow a late-payment charge, a Sales Debit Note is the document that adds it to the customer’s account. It charges the customer more, is not blocked for a stopped customer, and appears on the ageing and the statement like any other document. It is also an e-invoice document, so it goes to LHDN like an invoice would. Charging it is a commercial decision, and one the finance manager should make case by case. See Sales Debit Note.

Step 5: Deal with disputes separately

The outcome: disputed money is not mixed in with late money, and it gets a decision.

When a customer says “we are not paying that because…”, the invoice is disputed. Chasing it harder does not help. Take it off the collections list and put it on a disputes list with the reason, then settle it:

You were wrong (wrong price, short delivery, damaged goods): raise a credit note or a sales return and apply it to the invoice. Returns and Exchanges explains which to use.
The customer is wrong: send the proof (the signed delivery document, the agreed quotation) and put the invoice back on the collections list with a date.

A dispute that is more than 30 days old needs a decision from the finance manager.

What success looks like

At the end of the month, in five minutes:

Run the Aging Report as of today and compare it with last month’s Historical Transaction Aging Analysis Report. The amount in the oldest two buckets should be lower. If it is not, the ladder is not being followed.
Open Collection Invoice with Aging for the month. Its Payment Days column shows, invoice by invoice, how long customers actually took to pay. A customer who is always twenty days late on 30-day terms has 50-day terms in practice, whatever the record says. That is a conversation to have (and possibly a term to change).
Every account over 60 days has a name against it in your collections log: a promise with a date, a stop, a dispute, or a proposed write-off.

Common mistakes

Waiting for BigLedger to flag lateness. It will not. Terms set a due date and age a report. Nothing else happens until a person looks.

Chasing an invoice that was paid. The receipt is in the bank but was never applied to the invoice, so the invoice is still open. Check before every call, and fix the habit that caused it.

Relying on a scheduled statement run. It produces nothing and reports nothing. Create the run by hand each month and count the lines.

Assuming every customer is on the statement run. Only customers in the selected categories, or with the selected sales agents, are included. A new customer with no category never gets a statement until somebody gives them one.

Chasing the buyer. The buyer placed the order and does not pay the bill. Get the accounts payable contact, and put their address on the customer record so the statement reaches them.

Mixing disputes with late payers. A disputed invoice aged 70 days sitting next to three genuinely late ones hides both problems. Keep two lists.