March 26, 2020

Handle Collections and Credit with Dynamics 365

Small Business
Ronald B. Allen

There are few things more important to business success than efficient management of billing and collections of your accounts receivable. Simply paying attention to how accounts are aging allows you to remind your customers to pay. And, when accounts are way past due, you need to institute collection processes yourself or send them to a collections agency. The more robust your accounting system, the better you will be able to track bills and payments. In today’s fast-paced business world, an excellent solution that lets you handle collections and credit “in house” is to be found in Microsoft Dynamics 365 Business Central.

Accounts Receivable, Credit, and Collections with Dynamics 365

A very useful feature of the Finance Collections page in Microsoft Dynamics 365 is that you can manage collections information for accounts receivable in a single central view. When you are managing credit and collections “in house,” this is very effective. And, if you send overdue bills to a collections agency, you can generate customer lists according to your own criteria on your Customers page and send those.

To best understand and effectively work with collections in Dynamics 365, you will want to know how Dynamics used the following concepts to get the job done:

Customer Aging Snapshots

This is information about balance aging at a specific point in time

Collections Customer Pools

These are designed to help keep your work organized.

For example, collects sent to your designated agents come from designated customer pools.

List Pages

You will use these to organize activities and cases for collections customers. For any individual customer, all information about collections can be found and worked with on one page.

Fee reversal, reinstatement or waiving only takes one step.

Writing off transactions only takes one step as does processing not sufficient funds payments (NSF).

Customer Aging Snapshots

Dynamics 365 lets you look at any point in time and the then-calculated aged balances. You can look at this information on an Aged Balances list page as well as on the Collections page. However, you need to create the snapshot first before you can see it in Collections.

This information breaks down for each customer with a header and detailed records that match your definition for the respective aging period.

Aging Snapshot Header

In the header you will see the following information:

• Total due amount

• Credit limit

• Amount from packing slips

• Amount from sales order

• The number of transactions that are disputed

• Total amount for disputed transactions in that customer’s account

These amounts will include calculations for all of the transactions for the customer in question. You can also look in the Credit information FactBox (on the Collections page) to see amounts for sales orders and packing slips, the total amount due, and the credit limit.

You will specify a date when setting up a snapshot and then create aging period definitions such as 30, 60, and 90 days past due. Dynamics 365 then calculates the information and produces a detailed aging snapshot record. Each record has its own ID. The information can be viewed on the list page in Aged balances and in the FactBox for Aged balances on the Collections page.

We have written about finding the hidden costs in your business. Simply setting up customer aging snapshots in Microsoft Dynamics 365 helps you more efficiently handle collections as well as credit. You more more-effectively collect what is owed you and reduce the expenses of dealing with non-payers.

Customer Pools for Collections

To most effectively deal with past due accounts and collections, it is useful to have a process that sorts out the accounts that will be easiest to collect on and the ones that are probably past hope. You may wish to sort according to geographic location, amounts owed, or any other set of criteria. Setting up customer pools is how you do this.

A collections customer pool is a database query that pulls out and organizes the specific information that you want to work with. You can filter according to Aged balances or recent Collections activities. You can simply pull up a select list of Collections cases too. Use this approach to fine tune the information you get when creating aging snapshots.

For help in defining the criteria you need to create useful customer pools for collections, contact us at Exigo Business Solutions in the Kansas City area.

Collections Agents

As Profit First Professionals, we advocate smart business decisions including taking your profit first. Another smart business decision in regard to collections is to assign the job to one person or one group that knows how to use a tool like Dynamics 365 and is familiar with your overall business operation.

The default setting in Dynamics 365 lets all users see off collection information on the list pages. However, when you delegate this job to a specific set of individuals, you can decide who sees what on a need-to-know basis. This way you will limit access to info on the Collections list pages and Collections page.

Dynamics 365 refers to those who are working in this area as Collection agents even though they are your own employees and not working for an outside agency. They are defined as such on the User setup page.

Collections List Pages

Dynamics 365 does a nice job of organizing the necessary information for you to efficiently manage collections. The list pages are the backbone of their approach. You will use these three when working in this area.

Aged Balances Lists

To set these up, Dynamics 365 needs a defined aging period. Here is how that works.

1. The first aging period definition on the Aging period definitions page is used if no other has been set up.

2. When you specify an aging period definition in the customer pool this is used unless you specify one in the query. When the pool has no definition, the one from the Accounts receivable parameters page is used.

3. Ideally, you will specify the aging period in your query.

The list page columns show you customer balances and the aged amount according to your defined aging periods.

Collections Activities

Use this feature to keep track of what everyone is doing in collections. List page columns in this case show you the collections activities that you wish to track. You will define these activities on the Collections page.

Collections Cases

This is where you can find and deal with specific collections cases. The columns show you individual cases categorized as Collections.

In order to see list pages as described above, you need to create aging snapshots. The default setting is that all users in Finance and Operations can see all of this info. To limit access to your designated collections agents, make sure to define who gets access.
Collections Page

Here is where you will handle collections by viewing information, managing data, and taking action regarding specific customers. The upper, middle, and lower panes show you cases, transactions, and activities.

You can filter by case in both the top and bottom panes. Check the FactBoxes for credit information and aged balances by customer stored in the aging snapshot. You can update info from here.

Use the Action pane to see customer, case, and activity information. From here you can change transaction collection status, send emails, reimburse customers, process NSF payments, and write off uncollectible balances.

Waiving, Reinstating, and Reversing Interest and Fees

On the All Customers list page, from the Collect tab in the Action Pane you can reinstate, waive, and reverse fees, complete interest notes, or transaction interest that are part of interest notes. Click Interest note, Transaction interest, or Fee.

If you are uncertain if these adjustments affect just interest notes and the associated fees, contact us at Exigo Business Solutions using the “Create write-off transactions in one step” section!

Creating Write-off Transactions

Rather than continuing to spend time, effort, and money on some bad debts you can choose to write them off. You can do this on the Collections form or Open customer, Customers, or Aged balances list pages by clicking Write off.

Contact us before doing this as you will be marking all of the customer’s transactions for settlement. The transaction will be created in a general journal which can have as many as three lines. Let us show you how to do this properly.

When you write off transactions for a customer, all transactions for the customer are automatically marked for settlement. The amount that is written off depends on the net amount of the marked transactions. The write-off transaction is created in a general journal and can contain up to three types of journal lines.

Note: Write-offs are created in the transaction currency.

Processing NSF (Not Sufficient Funds) Payments

Not only will some of your customers be behind on their payments, but their checks may be returned for not having sufficient funds in their account to pay you.

You can process NSF payments on the Collections page by clicking NSF payment. Doing this cancels the payment and creates a charge transaction in the payment journal if an NSF fee applies.

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