Credit control

Credit control involves monitoring customer accounts and motivating customers to pay outstanding invoices through statements, debtor letters, phone calls and, perhaps, sanctions. Finally, you may have to write off the debt of a customer who finds they are unable to pay their outstanding invoices.

You will have your own approach to credit control and there are a number of features within Sage 200 to help you monitor and take any necessary actions.

The basis of your credit control

Three items underpin the credit control features in Sage 200:

Monitoring customer debt

There are a number of reports and enquiry screens you can use to monitor the total levels of debt you are carrying across all your customers to view the detail of a single customer's outstanding debt.

To monitor total debt levels use:

  • Aged Debtors reports. There are detailed and summary versions of this report.

To examine a single customer's debt use:

  • The Credit Control Workspace.

Motivating customers to pay

To motivate customers to pay outstanding debt you can send them statements and debtor letters.

Statements list the transactions that are outstanding on a customer's account.

Debtor letters are linked to the age of the customer's oldest outstanding transaction. You set up debtor letter templates of increasing severity and link them to the due date periods you have defined. That way, debtor letters are only produced for actual outstanding debts and the severity of the letter generated is aligned to the age of the oldest debt of the customer.

Sanctioning a non-paying customer

If a customer does not address an outstanding debt you can temporarily:

  • Reduce their credit limit or payment terms.
  • Put the account on hold so no further invoices can be raised.

You could link these actions to the production of your debtor letters so that when debts reach a certain age you generate a letter and apply the sanction to the customer account.

Write off the entire customer account

When it becomes clear that a customer is not able to pay outstanding invoices and you have paid the VAT on those invoices, you can write off the debt and claim back from HMRC any VAT you have paid. Alternatively, you can write off the entire account without claiming back any VAT you have paid.

See Dealing with customer bad debt.

What do you want to do?

Note - information

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