If you run a business that sells goods or services on credit, you know how important it is to collect payments from your customers on time. However, you also know how challenging and time-consuming it can be to keep track of overdue invoices and send reminders to your customers. As we start 2024, I want to revisit Reminders and show you the functionality in Business Central you can utilize and assist you in managing receivables.
Microsoft Business Central customer reminders allow you to create and send messages to customers when their payments are due or overdue. In this post, I will explain what customer reminders are, how to set them up, and how to use them effectively.
Understanding Customer Reminders
Reminders are documents sent to a customer with an overdue balance stating the details of the amounts due. The goal of a reminder is to chase outstanding debt, reduce cash collection time, and improve cash flow.
Reminders are not the same as customer statements because reminders only include overdue invoices, while statements include all transactions, including debt that is not yet due.
Benefits of Using Reminders in Business Central
Business Central comes with a comprehensive reminders functionality that allows users to create, issue and send customer reminders manually or in full automation. The main benefit of using reminders in Business Central is the reduced admin time required to chase outstanding debt, which includes running aged receivables reports, creating copies of invoices, and sending emails to customers.
In this post, you will learn how to set up, create, and issue reminders in Business Central, send reminders to customers via email, and run the entire functionality on a schedule.
Setting Up Customer Reminders
The first step to set up reminders is to ensure the Number Series is correctly set up on the Sales & Receivables Setup page.
The next step is to create Reminder Terms. Search for Reminder Terms in Business Central and open the page link, or click here to open the page in your production environment.
The page will show a list of reminder terms that include the following fields:
- Code
- Description
- Max No. of Reminders: Defines how many reminders Business Central will send to the customer.
- Post Interests: If this field is selected, the reminder created will include interests calculated on the Finance Charges Terms
- Post Additional Fee: Allows additional fees to be calculated on the reminder. Additional fees can be fixed, calculated, and by reminder line.
- Minimum Amount (LCY): Indicates the minimum amount in local currency to generate a reminder. Customers with an outstanding balance of less than the minimum amount will not get a reminder.
- Note About Line Fee on Report: Free text field that will appear on the reminder fee line.
I have two reminder terms in my sandbox: Domestic and Foreign, but Business Central supports multiple reminders. In most of my projects, my clients set up one reminder term that they apply to all customers.
Reminder Levels
Next, we will create Reminder Levels that store the details about frequency, the calculation of the fees, and any text we want to include on the reminder that Business Central will send to our customers.
Let’s open the Reminder Levels by clicking on the Levels link on the page menu.
A new page opens that looks like the one below:
Let’s analyze the Reminder Levels fields: Levels are defined by numbers where the smallest number is the first level. The grace period determines how long before the reminder is created, starting from the invoice due date.
For example, a customer with a reminder term where level one has a five-day grace period with an invoice due on the 10th of the month will receive a reminder on the 15th.
The due date calculation field determines when the reminder is due. This is often a counterintuitive concept, but an issued reminder has its due date, which differs from the invoice due date. If we look at the previous example, the reminder issued on the 15th for an invoice due on the 10th will have a due date of the 15th of the following month. After that, the second reminder level will be issued, and so on, until the last reminder is sent.
The next field we need to set up on the reminder terms is the Calculate Interest field. This field determines if interest will appear on the reminder when the reminder is issued. The Post Interest field in the Reminder Terms page specifies if the calculated interest must be posted to G/L and customer accounts. To indicate that interest should be calculated, choose the Calculate Interest field on the reminder term and then enable the Calculate Interests field.
Note: Reminders fees are different than interests. When calculating interest on a reminder, Business Central creates a Finance Charge Memos. You can also calculate interests on overdue invoices without creating a reminder. More about finance charge memos in an upcoming post.
There are three types of fee calculation we can set up for each reminder term:
1. Fixed: Fixed fees are copied from the Additional Fee field on the reminder level reminder level. In my example, I have a fixed fee of $50.00 for reminder level 4.
2. Single Dynamic: With this option, fees are calculated based on the values of the fields in the Additional Fee Setup page for that reminder level. Single dynamic calculates a single fee for the reminder.
In the picture below, I have a 5% fee calculated on any currency on my reminder number 2. I also set up a maximum fee amount of $50.00.
3. Accumulated Dynamic: Fees are calculated based on the values of the fields on the combined lines in the Additional Fee Setup page for that reminder level. Accumulated Dynamic calculates a fee for the reminder total amount.
Reminders Texts
The last step to set up reminders is to include Beginning and Ending Texts. The action is under the Related link on the page menu.
Beginning and Ending Texts show on the issued reminder and can include text formulas or placeholders. For example, if I use the placeholder %7, the text will consist of the reminder amount, as you can see below:
The text on the reminder document will show the total amount in the reminder text.
For a complete list of placeholders, see the table below:
|
Placeholder |
Value |
|---|---|
|
%1 |
Content of the Document Date field on the reminder header |
|
%2 |
Content of the Due Date field on the reminder header |
|
%3 |
Content of the Interest Rate field on the related finance charge terms |
|
%4 |
Content of the Remaining Amount field on the reminder header |
|
%5 |
Content of the Interest Amount field on the reminder header |
|
%6 |
Content of the Additional Fee field on the reminder header |
|
%7 |
The total amount of the reminder |
|
%8 |
Content of the Reminder Level field on the reminder header |
|
%9 |
Content of the Currency Code field on the reminder header |
|
%10 |
Content of the Posting Date field on the reminder header |
|
%11 |
The company name |
|
%12 |
Content of the Add. Fee per Line field on the reminder header |
The last thing we must do is apply the Reminder Term Code to a customer.
Now that the setup is completed, we can see how it works with some examples.
Create Customer Reminders for One Customer
The simplest way to create a reminder is to start from the customer card, where we can see if a customer has an outstanding balance. The field Amount Due (LCY) shows the customer’s outstanding balance. In my example, I have customer C00050 with a balance of $6.000,00. If I drill down the field, I see the customer ledger entries that made up that balance. In this case, it’s one invoice due on 08/31/2023.
The first reminder level of the Domestic Reminder Term has no additional fee and is set up with a grace period of five days. Therefore, I can create a reminder for this invoice only after 09/05/2023.
I can create the reminder in two ways: The first is to click on the action Create Reminder from the customer ledger entries page. This action will try to create a reminder for the single invoice.
The other option is to run the reminder from the customer’s card. This action will try to create one reminder for all the outstanding invoices for that customer.
Both options will try to create a Reminder and populate the lines with overdue invoices based on the Reminder terms. However, nothing will happen if the outstanding invoices are still within the grace period. Here is an example of the error I get if I run the reminder with a system date set as 09/05/2023.
The error confirms that the invoice is still within the five-day grace period. Therefore, Business Central will not create the Reminder.
If I change my system date to 09/06/2023 and try again, this time from the customer card, I get a Reminder with no lines. I run the Suggest Reminder Lines, and I get one line for the invoice due on 08/31.
The next step is to issue the reminder, which is equivalent to posting an invoice. Until we issue it, the reminder is only a draft document.
The issued reminder below is a simple document with one line and no charges. In a real business scenario, you might have reminders with more than one invoice and fee lines. Users can send issued reminders via email from Business Central using the built-in function Send by Email.
My reminder level one has a due date of one month, and the second level has a grace period of two days. Because the issued reminder date is 09/06/2023, the next level will apply after 10/08/2023.
I changed my system date again, and I ran another reminder for customer C00050. This time, I get a reminder with level two, which comes with a single dynamic calculation type and two charges. The result is the Reminder below.
Let’s look at this reminder in detail: There are two additional lines. The first is a Line Fee, and it’s calculated based on the Additional Fee per Line setup where I have a 10% fee with a maximum amount of $100.00
The text Late Payment Processing Fee is copied from the Additional Fee per Line Description. The G/L code 10500 comes from the Additional Fee per Line field on the Customer Posting Group.
The first line comes below the invoice line because it’s a per-line fee. There would be more of these lines with G/L 10500 if more invoices were in the Reminder.
The second line, Additional Fee, is calculated based on the additional fee set up on the reminder term. I used a 5% fee with a maximum of $50.00. The general ledger 10550 comes from the Additional Fee Account on the customer posting group. Document number 1012 is a draft like the previous reminder until I use the Issue action on the Reminder menu.
This time, the Reminders will also post the fee entries to the general ledger, but only for the fee type where posting is enabled in the Reminder term. In my example, I enabled only the additional fee, not the fee per line. Therefore, my Reminder shows only the additional fee of $50.00 plus Tax.
Automate Reminders
Now that we understand how Reminders work, we can move to the next level and set up Business Central to run it in automation.
Note: I don’t recommend setting up the Reminders and enabling the automation without proper testing of the configuration and setup. Reminder texts and fees should be discussed across the organization, and the process should be automated only after it’s been thoroughly tested.
Assuming that the setup about Reminder terms, levels, and fees is done, the automation is quite simple. We can search for Reminders in Business Central and run the action Create Reminders from the page menu.
Business Central will open a report request page where we can apply some filters. For example, we can run it only for customers with an outstanding amount of more than $500, as in my example below.
This way, users can create multiple Reminders without opening each customer card. Users must still issue the Reminders; when issuing them, they can email the document to the customer.
The last option is to let Business Central run the entire functionality on a schedule. For this, We need two job queues.
The first is a job queue on report 188. Ensure to open the Report Request page, select the appropriate filters, and set up the schedule. In my example, I run the job queue on Monday, Wednesday and Friday at 5:30PM or 18:30:00.
Report 188 will create the reminders and the lines. The next job for report 190 queue will issue the reminders and send them via email. Ensure this job queue starts after the one that runs on report 188.
Remember to check the report request page and select Email.
Final Thoughts
Using customer reminders in Business Central offers many benefits, such as reducing manual work, increasing efficiency, enhancing customer relationships, and avoiding bad debt.
Business Central supports multiple reminder levels, fee, and interest calculation, adding dynamic texts, and sending reminders by email manually or in full automation.
The post Managing Receivables in Business Central, Setting Up Customer Reminders appeared first on Dynamics Communities.