Automatic credit control for a client
What Achekam's daily credit control sends a bookkeeping client's customers, what it never does, and when the firm should step in or adjust it.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Small businesses are often owed more than they realise, and they chase late payers least when they are busiest. The owner who should be sending reminders is out delivering the work. By the time someone looks at the debtors list, invoices are three months old and the customer has stopped answering.
Automatic reminders help, and Achekam sends them by default. But when the firm keeps a client's books, those reminders go to the client's customers in the client's name, and the firm needs to know exactly what is being sent, when, and what can go wrong. This article covers all three.
What runs each day
Credit control is switched on for new workspaces. Once a day, it e-mails overdue reminders to customers, and a monthly statement to customers who have a balance. It needs working e-mail settings in the client's workspace; without them, nothing reaches the customers.
By default, reminders go at 7, 14 and 30 days overdue, each with the invoice PDF attached. The monthly statement is the customer statement of account the server produces as a PDF, listing what the customer owes.
For a firm taking on a new bookkeeping client, that means credit control may already be running when the firm arrives. Check three things in the first week:
- Whether the client's e-mail settings work, so reminders actually go.
- Whether customer e-mail addresses are current and go to someone who pays invoices.
- Whether the open invoices are genuinely open, since a reminder for an invoice that has been paid does more harm than no reminder.
Reminder timing and monthly statements
The default timing suits many businesses, but not all. Discuss with the owner whether the defaults, or automatic reminders at all, suit the client where:
- a large customer pays on a fixed monthly run, so a reminder at 7 days overdue only irritates its accounts team;
- invoices are in dispute and the client is negotiating, where an automated chase can undermine the conversation;
- the relationship is sensitive, such as patients of a medical practice or members of a club, and the owner wants to make the first contact personally;
- the client's own terms are unusual, for example a contractor whose invoices must be approved by the employer's agent before payment is due.
Statements matter as much as reminders. A customer that pays by remittance against a statement will find gaps the client missed: an unallocated payment, a credit note never applied. When a customer queries a statement, treat the query as a reconciliation lead.
The ageing behind all this is standard. Receivables are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals, which is the report the owner and the firm should look at together each month.
It never charges anyone
Credit control sends e-mails. It never charges a customer: it does not take a card payment, run a debit order or deduct anything. Customers pay through whatever channel they normally use, and the payment then has to be recorded.
That last step is where automatic reminders most often go wrong. Matching a bank receipt to a customer invoice does not, today, record the payment against the invoice; the receipt must also be recorded in receivables. If the bookkeeper matches the bank line and stops there, the invoice still shows as overdue, and the next morning's run sends the customer a reminder for an invoice they have paid. Recording receipts in receivables promptly is the single most effective way to keep credit control accurate.
The record of each e-mail
Achekam records whether each reminder and statement went out. For a single statement, the screen also says whether it was sent. Look at that record when:
- a customer says they never received a reminder or statement;
- the client asks whether a particular customer has been chased;
- reminders seem to have stopped, which often points to an e-mail settings problem.
The record shows whether an e-mail was sent, not whether the customer read it. For a customer heading towards a letter of demand, keep proof of contact outside the automatic run as well: a letter, a phone note, a direct e-mail. ICAEW's helpsheet on chasing debtors is a practical guide to dealing with an unpaid invoice: checking the business's own processes first, chasing informally, and then choosing the next step. Its examples are from the UK, but the sequence travels well.
Write-offs need a partner
Eventually some debts will not be paid. Achekam handles the two ways an invoice leaves receivables differently:
| Situation | What Achekam allows |
|---|---|
| Invoice issued in error, with no payments or credits against it | An administrator can void it, which reverses its journal |
| A real debt the customer will not pay | It can be written off once a partner approves |
Voiding is for mistakes, not for bad debts. A write-off records that a real sale was made and will not be collected, and requiring a partner's approval keeps that decision with someone senior. Before proposing one, make sure the client has exhausted reasonable collection steps and that the write-off is documented. For a client that reports under IFRS or IFRS for SMEs, the year-end judgement about expected losses on receivables is a separate exercise from writing off individual debts; it is covered in trade receivables and impairment.
A worked example
A small engineering firm's books show a large customer with three invoices more than 60 days overdue. The automatic reminders have gone each time, recorded as sent. The firm's bookkeeper checks the bank and finds two of the invoices were paid weeks ago but never recorded in receivables. She records the receipts, apologises to the customer for the reminders, and the remaining invoice turns out to be disputed. The owner calls the customer himself to settle the dispute, and the monthly management accounts note the disputed amount separately; see monthly management accounts for a client.
A monthly routine
Once a month, review the aged receivables with the owner, check that every receipt has been recorded in receivables, look at the record of reminders for any that failed, and agree which customers need a personal call. Automatic reminders do the routine work; the owner and the firm still have to do the rest.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
