Receivables management is professional dunning with the aim of avoiding payment defaults and securing the liquidity of a company in the long run. It is part of intra-company accounting and begins by sorting, registering and arranging outstanding payments. In the case of payment defaults, functioning receivables management ensures that the invoice recipient is not only effectively reminded of the obligation to pay on time, but also requested to settle the matter. Efficient receivables management does not begin with the collection of outstanding payments and the first payment reminder. Even before a business transaction is initiated, it is recommended that the business partner's solvency and annual financial statement be reviewed and the debtors' and commercial register be inspected – especially in the case of high-volume orders. This comprehensive form is referred to as receivables management. It summarises all the processes in a company's accounting department and can avoid bad debts right from the outset and to efficiently process the bad debts already incurred.
Professional receivables management and hedging against bad losses begin with contract design. By including a due-date clause, we can establish an exact payment date or a specific payment target, e.g. payment of the purchase price after receipt of the goods. In the case of bulk transactions, contract execution can be simplified and speeded up with pre-formulated clauses. This refers to the so-called general terms and conditions which can also include dunning and collection costs, in addition to warranty periods and limitations of liability. Moreover, effective receivables management also includes auditable invoices. These must comply with the legal requirements, and, as a rule, they also include non-mandatory information, such as the due date of the payment. If the customer has let the last day of an agreed payment term expire, the customer is in default. If a deadline has not been agreed and no reminder sent out, the default occurs 30 days after receipt of the invoice; however, this specific rule only applies to business customers. If the transaction includes a consumer, the consumer must be informed of the 30-day deadline.
In principle, a collection letter to a consumer does not have to fulfil formal requirements. However, it should include essential items, such as, e.g., the invoice date, invoice number, the due date, the amount of the outstanding claim as well as a new payment date. If receivables management has not produced any effect so far, the only remaining form of a warning – which is at the same time also the most urgent one - is: court dunning proceedings resulting in the issue of an enforcement notice (title) by the competent dunning court.
In view of the rapid increase in the number of court dunning proceedings, receivables management is a must for all companies as well as freelancers. Depending on the size of the company and the number of customers, it can be sensible to place dunning in the hands of companies specialising in the collection of outstanding payments. The decision for or against outsourcing is also based on a cost-benefit analysis.