An overdue bill isn't just money owed. The company provides financing to the customer.
Meanwhile, it pays wages. It pays suppliers. It pays taxes. It maintains capacity.
That is why managing outstanding receivables is not just a matter of making occasional phone calls. It is a monitoring process.
Fourteen days. Recorded steps. One person in charge. Documented status.
1. The process begins before the invoice is issued
The quality of collection is already determined by the contract and the billing process.
Check:
- the partner's exact legal name;
- the billing address and tax ID number;
- the person who approved it;
- the purchase or order ID;
- the requirement for a certificate of completion;
- the payment due date;
- the channel through which the invoice was received;
- the dispute resolution liaison.
If the master data is incorrect, the payment will be delayed right from the start.
2. The invoice should have four statuses
The term „open” is too broad.
Use more specific statuses:
- Exhibited: The invoice has been prepared and sent.
- Confirmed: The partner has accepted it, and there are no technical issues.
- Due: The payment deadline is approaching.
- Expired: The money hasn't arrived.
If the status is expired, an additional error code is required:
- administrative error;
- disputed performance;
- liquidity problem;
- pending approval;
- Contact person is unavailable;
- unknown cause.
The error code determines the next step.
3. D−3 days: Pre-event reminder
Three days before the due date, send a brief, to-the-point reminder.
Contents:
- account number;
- amount;
- due date;
- payment information;
- Contact us if you have any technical questions.
Don't make it sound threatening. Don't make it too long.
The goal: to detect technical issues before the expiration date.
4. Day D+1: Status Check
On the first day after the due date, do not assume bad faith.
Check:
- whether the invoice has been received;
- whether the performance was accepted;
- whether any documents are missing;
- When is payday scheduled for?;
- who is the actual decision-maker.
Record your partner's response. Include the date, name, and promised payment date.
„We'll transfer it soon” is not valid data.
5. Day D+3: Verification of the payment commitment
If your partner has made a specific promise to pay, treat it separately.
Fields:
- promised amount;
- promised date;
- a person who makes a promise;
- condition or note;
- Date of re-inspection.
The fulfillment rate of payment commitments is an important performance metric.
If the customer consistently fails to keep their promise, the terms of the next order must be modified.
6. Day D+7: Responsible Action
After a one-week delay, the item can no longer remain on the general financial list.
Assign a business manager.
The person responsible may be:
- salesperson;
- project manager;
- Customer Relations Manager;
- the managing director, if the amount or the relationship is significant.
The finance department provides the data. The business manager handles the relationship.
The two work together.
7. Day D+10: Identification of payment obstacles
By this point, we should have a clear answer.
There are three basic situations:
- Administrative obstacle: Editable document, missing ID, internal approval.
- Discussion: the customer objects to the performance, quantity, or terms.
- Solvency issue: The customer is unable to meet the deadline.
Do not handle the three cases with the same message.
In the event of an administrative error, a correction is required. In the event of a dispute, a dispute resolution officer is required. In the event of liquidity difficulties, a documented management decision is required.
8. Day D+14: Management Decision Gate
After two weeks, the item requires a management decision.
Possible decisions:
- a brief, written payment schedule;
- partial payment and remaining due date;
- suspension of new work;
- requiring an advance payment or a shorter deadline;
- reduction of the credit line;
- contractual or legal proceedings with the involvement of an expert;
- Indication of impairment risk.
Do not hide the decision in an email thread. Mark it as "in collection.".
9. Age Group System
The executive summary should include four categories:
- 1–7 days;
- 8–14 days;
- 15–30 days;
- More than 30 days.
For each one, you'll need:
- amount;
- number of customers;
- the five largest items;
- responsible;
- next step;
- promised payment date.
The age distribution is not a decorative chart. It is a priority list.
10. Shutdown Rule
Specify in advance when the new performance will end.
Examples:
- an overdue debt exceeding a specified amount;
- two broken promises regarding payment;
- A delay of more than 30 days;
- disputed performance without a resolution plan;
- a recurring administrative obstacle.
The stop-out rule is not a penalty. It is a risk limit.
11. Weekly Dashboard
The weekly receivables review includes:
- all outstanding receivables;
- amount due;
- expired ratio;
- Amounts over 30 days;
- fulfillment of a promise to pay;
- DSO trend, provided the system calculates it reliably;
- the ten riskiest items;
- Expected to arrive next week.
Link this to the 13-week cash flow forecast. Uncertain items should not be included as certain cash.
12. Minimum Operating Rule
The process works if every overdue invoice has:
- reason;
- person in charge;
- next step;
- deadline;
- documented customer commitment;
- level of action.
There are no unclaimed debts. There are no undated promises. There is no endless patience.
Debt collection is not aggressive debt collection. It is consistent business practice.
Specific notice, contractual, and legal steps must be tailored to the company’s agreements and expert advice.