Dunning
Dunning is the process of informing customers about the state of their account and collecting money from customers that they owe to the organization.
Dunning is the process of informing customers about the state of their account and collecting money that they owe to the organization. As a process, it generally starts with polite requests, perhaps verbally or a sent statement of account, followed by e-mails and letters that might escalate to legal threats before the account is written off and passed to a collections agent.
An example of a company policy on Dunning might be as follows:
For invoices over their due date by less than 15 days, a polite phone call to inquire and request payment. No action taken on the Customers's Account.
For returned checks - enter a negative payment and a new invoice charging a returned check fee. Find the original payment and reset the payment allocation. Allocate/cancel the original payment and the returned check. This will leave the invoice unpaid. Call the customer and politely request payment. No action taken on the Customers's Account.
For invoices over 30 days, a letter requesting immediate payment. No action taken on the Customers's Account.
For invoices over 60 days, a letter threatening that the amounts will be passed to a collections agent. The Customers credit is stopped and the payment term applied to new invoices is changed to Immediate.
For invoices over 90 days, write off the amount owing and pass the invoice to a collections agent. This is a manual process.
ADempiere includes tools to help with the Dunning process making it easy to manage collections for a large number of customers by keeping track of where each customer and invoices sits in the process. The intent is that the Dunning process be "run" on a periodic basis and at each run, invoices move through the process until they are paid or written off. There are two key periodic tasks:
Generating lists of invoices and payments relevant to the Dunning policy, referred to as a "Dunning Run"; and
Printing or emailing Dunning letters to the delinquent customers, a process called "Print Dunning Letters."
The Dunning process can be customized for a particular Business Partner or Business Partner Group and each process can have multiple levels or steps that collectively define the Dunning policy of the company. Each level can take a number of actions such as printing letters, sending emails, stopping credit or resetting the payment terms for the Customer. Customer Invoices are flagged as being in the Dunning process and associated with a particular Dunning Level.
The relationship with individual customers can be further managed by setting a Dunning Grace Date in the Business Partner window, Customer tab, which affects all invoices, or in the Invoice (Customer) window, Invoice tab, for a particular invoice. The Customer or Invoice affected will not be included in Dunning processes until after the Dunning Grace Date.
Dunning Setup
To start using Dunning, the dunning policies must be defined and setup according to your needs. Once the setup is complete, Dunning becomes a periodic and repeatable activity of creating Dunning Runs and Printing Dunning Letters.
The Dunning Policy
A Dunning policy definition starts with a Dunning record and one or more Levels. Open the Dunning window in the Partner Relations > Business Partner Rules menu. The Dunning window is relatively simple. You will need to create a new record for each distinct dunning policy or collection of levels you require. The key fields are as follows:
Dunning Levels
The Dunning Level defines the actions that should be taken based on some triggers. To understand how to setup the levels it helps to know how they are used.
The gathering of information on which Business Partner needs to be Dunned is called a "run". When the Dunning process is run, it is run for a particular level or all levels and for a particular date. The date when the Dunning process is run determines the age of the invoices and the number of days after the payment due date for each unpaid invoice. For each level, all the invoices that meet the constraints of the Level are identified. If payments are to be included, these are also identified. Fees, if any are added. All this information is gathered in a Dunning Entry for each Business Partner but nothing is done with the information at this point. You can review the Dunning Entries and the Entry Details (the identified invoices etc..) and verify that all is in order or you can re-run the Dunning process and recreate the Dunning Entry information. If a new run is performed before the previous was processed, the Entries and Entry Details will be duplicated.
Actions are taken when the Dunning Entry is processed. This could include the sending of e-mails or printing of letters and other actions as mentioned below. Once processed, no further changes are allowed and the invoices identified will be in the dunning process. Once processed, if a new run is performed, the Entries and Entry Details will be different depending on the constraints set in the Level.
The Level defines the constraints using the following fields:
For the first Dunning Level, its important to set the Days between dunning to zero since invoices that have not yet been dunned have zero days since the last dunning. If you set Days between dunning > 0 on all Levels, no new invoices will ever be found.
This only applies if you deselect the Show all due and Show not due flags.
Assigning a Dunning Policy to Business Partners
Each Business Partner needs to be associated with a Dunning policy or they will not be included in the Dunning process. The Dunning policy can be set for a Business Partner Group or individual Business Partners. The individual setting takes precedence.
To set the Dunning policy for a whole group, open the Business Partner Group window in the Partner Relations > Business Partner Rules menu. Select the desired Dunning entry in the Dunning field.
To override the Group Dunning policy, set the Dunning field in the Customer tab of the Business Partner window for a particular Business Partner.
Dunning Runs
A Dunning Run is a record of the dunning process. The Dunning Run record identifies the Dunning Date and Dunning policy and Dunning Level that was used. Each affected Business Partner becomes an Entry in the Dunning Run and each invoice, payment and fee becomes a Line of the Entry.
The Dunning Run window can be found in the Open Items menu.
There are two ways to create Dunning Runs:
Manually, by creating a record in the Dunning Run window with a Dunning Date, Dunning policy, and optionally a Dunning Level; or
Via a process, Create Dunning Run, which will also create the Entry and Line information.
The Create Dunning Run process is found in the Open Items menu as is the Dunning Run window. The Dunning Run window/tab also includes a button that executes the Create Dunning Run process.
Creating Dunning Runs Manually
Open the Dunning Run window and create a new record. Set the fields accordingly. The key fields are as follows:
In addition to these three key fields, there is a Button Create Dunning Run **_and a flag Processed. The button process and parameters are described below. When run from the Dunning Run window, the Create Dunning Run_ process will generate the Entry and Line records for the Dunning Run.
The Processed flag is read-only and will be set once the Dunning Run is sent/printed.
Creating Dunning Runs via the Process
Dunning Runs can also be created using the Create Dunning Run process found in the Open Items menu. The benefit to using the Create Dunning Run process from the menu is that it will create a number of Dunning Run records at once along with their associated Entry and Line information.
If you run the Create Dunning Run process from the menu, it may duplicate an existing **unprocessed Dunning Run** rather than recreate the Entry and Line records.
Whether run from the menu or from a Dunning Run record, the process is similar. The Create Dunning Run process has a number of parameters that control how the Dunning Run, Entry and Line records are created:
Dunning Run Entries and Lines
Once the Dunning Run Entries and Lines have been created by the Create Dunning Run process, they can be reviewed and adjusted if required. No changes to the status of the invoices or customers has occurred and won't until the Dunning Run is printed. Until then, Run Entries and Lines can be deleted or made inactive (by deselecting the Active field). The entire Run can also be deleted. It may be apparent, for example, that payments can be allocated to unpaid invoices and that this should be done before the Customer is sent a dunning note. If necessary, the Create Dunning Run process can be repeated and the Dunning Run entries will be recreated.
To review the Dunning Run, open the Dunning Run window in the Open Items menu. The Dunning Run tab is pretty straight forward. Processed runs will be read only. Click the Create Dunning Run button to recreate the entries if required.
The Create Dunning Run process will overwrite the Dunning Date, Dunning policy and Dunning Level fields.
Dunning Run Entry
The Entry tab shows records for each Business Partner and Dunning Level. If a Level was not specified on the Dunning Run tab, there may be multiple Entry records for each Business Partner, one for each Level that applies. The following describes the key fields:
Dunning Run Line
The Line _**_tab list the invoices, payments, fees and interest being dunned. The fields are self explanatory.
Previewing the Dunning Letter
It is possible to preview or print a Dunning Letter from the Entry tab of the Dunning Run window. Simply select an Entry record and click the Print or Print Preview icon in the toolbar. A Dunning Letter for that entry, using the assigned print format will be shown/printed. An example is linked below.
Printing or previewing the Dunning Letter this way does not "process" the Entry. It only allows you to see the document that was or will be sent to the customer. To "process" the Entry, you have to run the Print Dunning Letters process discussed below.
Print Dunning Letters
The process Print Dunning Letters in the Open Items menu will print the Dunning Run information and/or send the information as a PDF attachment to the customers. Running the process will mark the Dunning Run as "Processed", making it read-only. The process will also update the Collection Status and Dunning Level of the Invoice, and, if so configured in the Dunning policy, set the Customer's Business Partner Credit Status to Credit Stop and replace the Customer's default Payment Term.
There are a few parameters you can set to control how the process runs. The process can be run multiple times to reprint the information or change the parameters.
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